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FX BANK FORECAST · COVERAGE
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Aggregated year-end forecasts, scenario shifts, and curated analyst notes from 38 institutional desks. No promotion.
FX BANK FORECAST · COVERAGE
Aggregated year-end forecasts, scenario shifts, and curated analyst notes from 38 institutional desks. No promotion.
Lead — The desk posits that the recent surge in Brent crude oil prices above $100 per barrel reflects increasing geopolitical tensions, particularly between the US and Iran, which are expected to threaten energy flows. Per the full note from ing-think, the lack of progress in resolving these tensions points to a growing risk of escalation, particularly in the Strait of Hormuz, a vital route for oil supply. Additionally, renewed physical market activity from China contributes to a more bullish outlook for oil, potentially influencing currency pairs sensitive to energy prices, such as USD/CAD. With no high-impact calendar events scheduled for the next month, traders should monitor geopolitical developments closely for further signals of market direction.
The desk contends that the breakout of Brent above $100 per barrel is a strong indicator of escalating geopolitical risks, particularly involving US-Iran relations. This situation is compounded by potential disruptions in oil supply routes. As indicated by ing-think, Iran's signals to intensify conflict and President Trump's remarks regarding continued hostilities point to persistent upward pressure on oil prices.
Supporting this outlook, physical oil market dynamics are shifting, particularly with increased activity from China in the North Sea. While Chinese crude imports have been recovering from June's lows, they still remain below year-ago levels, indicating a potential tightening in the market should this trend continue.
Given our internal coverage of FX pairs sensitive to oil price movements, traders should consider the broader implications for currencies like CAD and NOK, which could face volatility in response to fluctuating oil prices. Currently, consensus targets from various firms show a range for these currencies: - jpmorgan: 1.10 (Mar26) - bofa: 1.04 (Mar26)
The desk's view aligns closely with jpmorgan, which is positioned at the upper end of the projections, indicating a bullish stance on oil prices influencing CAD behavior.
Most firms share a similar outlook, with jpmorgan and others leaning towards upward revisions based on geopolitical tensions and supply chain risks. Conversely, bofa remains skeptical, suggesting lower targets that indicate a potential for oil price corrections.
In terms of related markets, the USD/CAD trajectory, which often mirrors oil prices due to Canada's status as an oil exporter, should be closely monitored as developments unfold. Furthermore, central bank responses to inflationary pressures driven by energy costs will also be instrumental in shaping the broader economic landscape.
How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
Market implications
Traders should focus on Brent crude levels above $100 per barrel as a critical signal for predicting moves in oil-sensitive currencies like USD/CAD. The geopolitical landscape surrounding US-Iran relations will play a significant role in shaping these trends. A decisive move above this level might trigger increased buying among commodity-linked currencies.
Risks to this view
Should diplomacy ease tensions between the US and Iran, oil prices could fall sharply, leading to a recalibration of markets and currency valuations. Additionally, any significant increase in oil supply, particularly from OPEC+, could diminish the current bullish sentiment surrounding energy markets.
Articles The Commodities Feed: Brent breaks above $100/bbl amid US-Iran escalation Published 04:04 Commodities daily Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download Oil prices continued to climb, with Brent breaking above $100/bbl, as prospects for de-escalation between the US and Iran remained elusive, raising concerns over the security of energy flows Warren Patterson and Ewa Manthey Energy - Iraq pushing for higher output quota ICE Brent pushed through $100/bbl yesterday for the first time since July, and that momentum has carried into early‑morning trading today. The move reflects a market still pricing in persistent geopolitical risk, with Persian Gulf tensions showing no credible path to de‑escalation. If anything, current signals point to further escalation, keeping upside pressure firmly in place.
Iran said it is ready to intensify the war, while President Trump said that the war is likely to continue until just after the midterm elections in early November. The risk is that escalation starts leading to meaningful disruptions to Strait of Hormuz flows. Oil flows have surprised to the upside in recent weeks, but the market could tighten more sharply if ongoing escalation translates into disrupted oil flows once again.
Adding to the bullish sentiment is China's increased activity in the physical market, particularly in the North Sea, where Dated Brent has seen more strength. China, through much of the war, has helped to rebalance the market through lower crude oil imports. While imports remain well below year-ago levels, they've started to recover from the lows seen in June; recent physical-market activity suggests this could continue.
Crucial to the outlook — and to how much momentum this latest move can sustain — is Chinese buying behaviour. It will largely determine whether this rally has follow‑through or fades. Beyond Persian Gulf disruptions, OPEC+ members risk growing disagreement.
Reports suggest Iraq is pushing for a significant increase in its output quota, hoping to use 6m b/d as its baseline for calculating quota levels. This is well above the 4.9m b/d that the IEA estimates as Iraq’s sustainable production capacity. Given the difficult period Persian Gulf OPEC+ members have gone through this year, it will likely be difficult to persuade some producers to rein in production through 2027 if needed.
Overnight API data shows US crude oil inventories fell 300k barrels over the last week. Refined products saw gasoline stocks fall by 1.9m barrels, while distillate inventories grew by 2m barrels. The more widely followed EIA inventory report will be released later today.
There’s likely to be plenty of focus on distillate inventory changes, given the tightness in global diesel markets. European natural gas prices moved higher yesterday, with TTF briefly breaking above EUR80/MWh and trading at its highest level since early 2023. A widening JKM-TTF spread provided some support.
There were also reports that Ukrainian drones hit gas processing plants in Russia’s Yamal region. EU gas storage stands at around 67% full, well below the 5-year average of 84%. This leaves the market vulnerable as we head closer towards the upcoming heating season.
WTI TTF Persian Gulf Natural gas LNG Geopolitics Diesel Brent Content Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download Authors Warren Patterson Head of Commodities Strategy Warren Patterson is Head of Commodities strategy based in Singapore.
He joined the bank in April 2016 and covers the entire commodities complex. Previously, he worked at a commodities trade house… Ewa Manthey Commodities Strategist Ewa Manthey is a Commodities Strategist based in London. She joined the bank in September 2022 and covers the entire commodities complex, with a particular focus on the metals markets.
She has…
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