Crude Oil Radar

OPEC Market Analysis

Crude Oil Price Movements

In January, the OPEC Reference Basket (ORB) value rose by $0.61/b, month-on-month (m-o-m), to average $62.31/b. The ICE Brent front-month contract increased by $3.10/b, m-o-m, to average $64.73/b, while the NYMEX WTI front-month contract rose by $2.39/b, m-o-m, to average $60.26/b. The GME Oman front-month contract also saw an increase of $0.83/b, m-o-m, to average $62.79/b. The Brent–WTI front-month spread rose by $0.71/b, m-o-m, to average $4.47/b.

The forward curves of all major crude benchmarks strengthened, with ICE Brent and NYMEX WTI moving into stronger backwardation. This shift was supported by oil supply outages, easing selling pressure from speculators, and robust physical market fundamentals. The forward curve for GME Oman remained relatively unchanged, m-o-m. Speculative sentiment turned bullish, with hedge funds and other money managers significantly increasing their net long positions.

World Economy & Macroeconomic Backdrop

The global economic growth forecasts remain stable at 3.1% for 2026 and 3.2% for 2027. The US economic growth forecast has been slightly revised up to 2.2% for 2026, while remaining at 2% for 2027. The Eurozone's growth forecasts are steady at 1.2% for both years, with Japan's forecast at 0.9%. China's growth remains at 4.5%, while India's forecast is at 6.6% for 2026 and 6.5% for 2027. Brazil's growth is projected at 2.0% for 2026 and 2.2% for 2027, while Russia's growth forecasts are at 1.3% for 2026 and 1.5% for 2027.

Trade normalization and monetary policy impacts continue to shape the economic landscape, influencing oil demand and supply dynamics globally.

World Oil Demand Trends

The global oil demand growth forecast for 2026 is stable at 1.4 mb/d, y-o-y, with the OECD expected to increase by 0.15 mb/d and the non-OECD projected to grow by approximately 1.2 mb/d. In 2027, global oil demand is anticipated to grow by about 1.3 mb/d, y-o-y, with the OECD growing by 0.1 mb/d and the non-OECD by about 1.2 mb/d.

Regional demand distribution patterns indicate strong growth in non-OECD countries, driven by economic expansion, while OECD demand remains more subdued.

World Oil Supply Analysis

Non-DoC liquids production is forecast to grow by approximately 0.6 mb/d, y-o-y, in both 2026 and 2027, primarily driven by Brazil, Canada, the US, and Argentina. Natural gas liquids (NGLs) and non-conventional liquids from DoC countries are expected to grow by 0.1 mb/d in both years, averaging about 8.8 mb/d in 2026 and 8.9 mb/d in 2027.

In January, crude oil production from DoC countries decreased by 439 tb/d, m-o-m, to average about 42.45 mb/d, reflecting ongoing adjustments in response to market conditions.

Product Markets & Refining Operations

In January, refining margins experienced a decline across all reported trading hubs due to stronger feedstock prices and seasonal demand pressures. In the US Gulf Coast (USGC), losses were particularly pronounced in the lower section of the barrel, impacted by increased heavy crude availability.

In Rotterdam, all key product margins fell, with gasoline leading the decline, while Singapore saw a drop driven by elevated gasoline and jet/kerosene supplies.

Tanker Market & Freight Dynamics

The dirty tanker spot freight rates had a robust start in January, bolstered by weather disruptions and geopolitical uncertainties. VLCC spot freight rates surged, with the Middle East-to-East route reaching its highest level in a decade, up by 64%, y-o-y. Suezmax rates also rose due to weather disruptions, while Aframax rates reached a 10-year high.

In the clean tanker market, rates showed strong performance, particularly on the Middle East-to-East route, which increased by 17%, m-o-m.

Crude & Refined Products Trade Flows

In January, US crude imports averaged 6.3 mb/d, consistent with the five-year average, while exports rose by almost 0.2 mb/d to 4.2 mb/d, driven by higher flows to Europe and Africa. Product exports from the US averaged 7.0 mb/d, a decrease from elevated levels in previous months.

In Japan, crude imports surged to nearly 3 mb/d, the highest since March 2020, while China's crude imports hit a record high of 13.2 mb/d in December. India's crude imports remained elevated at 5.1 mb/d, despite a slight m-o-m decline.

Commercial Stock Movements

Preliminary December data indicate that OECD commercial oil inventories rose by 6.5 mb, m-o-m, to 2,845 mb. This level is 89.9 mb higher, y-o-y, and 44.1 mb above the latest five-year average, although 81.0 mb below the 2015–2019 average. Crude stocks fell by 2.1 mb, while product stocks increased by 8.6 mb.

OECD commercial stocks now stand at 62.8 days of forward cover, which is 1.8 days higher than December 2024 and consistent with the latest five-year average.

Supply-Demand Balance & Market Outlook

The demand for DoC crude in 2026 remains at 43.0 mb/d, which is about 0.6 mb/d higher than 2025. For 2027, the demand remains at 43.6 mb/d, also reflecting an increase of 0.6 mb/d from 2026.

The supply-demand gap analysis indicates that the demand for DoC crude is projected to exceed non-DoC supply, necessitating strategic production decisions to ensure market balance. The implications of this gap will be critical for future production strategies within the OPEC framework.