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, averaging $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. Speculative sentiment turned bullish, with hedge funds and other money managers sharply increasing their net long positions.

World Economy & Macroeconomic Backdrop

The global economic growth forecasts remain unchanged 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 forecast remains at 1.2% for both years, and Japan's forecast is stable at 0.9%. China's growth forecast is set at 4.5% for both years, while India is expected to grow by 6.6% in 2026 and 6.5% in 2027. Brazil's growth is forecasted at 2.0% for 2026 and 2.2% for 2027, while Russia's is projected at 1.3% for 2026 and 1.5% for 2027.

Trade normalization and monetary policy impacts are expected to play significant roles in shaping these forecasts.

World Oil Demand Trends

The global oil demand growth forecast for 2026 remains at 1.4 mb/d, y-o-y, unchanged from last month’s assessment. The OECD is expected to increase by 0.15 mb/d, while the non-OECD is forecast to grow by approximately 1.2 mb/d. For 2027, global oil demand is projected 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.

Key demand drivers include economic growth in emerging markets, while constraints may arise from geopolitical tensions and environmental policies.

World Oil Supply Analysis

Non-DoC liquids production is forecast to grow by about 0.6 mb/d, y-o-y, in 2026, primarily driven by Brazil, Canada, the US, and Argentina. This growth is expected to continue into 2027. Natural gas liquids (NGLs) and non-conventional liquids from DoC countries are projected to grow by 0.1 mb/d, y-o-y, in both years. In January, crude oil production by DoC countries decreased by 439 tb/d, m-o-m, averaging 42.45 mb/d.

Product Markets & Refining Operations

In January, refining margins declined across all reported trading hubs due to stronger feedstock prices and seasonal demand pressures. In the US Gulf Coast, losses were attributed to increased availability of heavy crude supplies. In Rotterdam, all key product margins fell, with gasoline leading the decline. Singapore experienced a similar trend, driven by elevated gasoline and jet/kerosene supplies.

Tanker Market & Freight Dynamics

Dirty tanker spot freight rates had a strong start in January, supported by weather disruptions and geopolitical uncertainties. VLCC spot freight rates reached the highest level for the month in over a decade, up by 64% y-o-y. Suezmax rates rose due to weather disruptions and increased demand from European refiners. Aframax spot freight rates also performed strongly, reaching a 10-year high. In the clean tanker market, rates on the Middle East-to-East route rose by 17%, m-o-m.

Crude & Refined Products Trade Flows

In January, US crude imports averaged 6.3 mb/d, in line with the five-year average. US crude exports rose by almost 0.2 mb/d, m-o-m, to average 4.2 mb/d. Product exports from the US averaged 7.0 mb/d, down from previous months. In Japan, crude imports surged to nearly 3 mb/d, the highest since March 2020. China's crude imports reached a record high of 13.2 mb/d, while India's crude imports remained elevated at 5.1 mb/d.

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 five-year average. Crude stocks fell by 2.1 mb, while product stocks increased by 8.6 mb. OECD crude oil commercial stocks stood at 1,363 mb, which is 75.5 mb higher y-o-y.

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 in 2025. The demand for DoC crude in 2027 is projected at 43.6 mb/d, also reflecting a 0.6 mb/d increase from 2026. The world oil demand for 2026 is forecasted at 106.5 mb/d, while non-DoC supply is estimated at 63.5 mb/d. This results in a DoC requirement gap of 42.5 mb/d.

The supply-demand gap analysis indicates a consistent requirement for DoC crude, emphasizing the need for strategic production decisions moving forward.