Oil Price Forecast: WTI Eyes $60, Brent Holds $63 as Venezuela Shock Builds

Global Oil Setup: WTI (CL=F) and Brent (BZ=F) Rebuild Risk Premium

Front-Month Benchmarks: CL=F and BZ=F Recover, But Inside a Supply-Heavy Tape

Front-month WTI (CL=F) trades around $59–$59.34 per barrel, up roughly 2.6–2.7% on the day, while Brent (BZ=F) is near $63–$63.42, gaining about 2.3–2.7%. That follows a 3%+ jump the previous session, putting Brent on track for roughly a 3–4% weekly gain and WTI up around 1.8–3% versus last Friday. These levels are a rebound from sub-$60 pricing: WTI was near $57–$57.76 earlier in the week before Venezuela headlines and Iran risk re-priced the curve. Despite the bounce, context matters: crude lost about 20% in 2025, and the current move is a retracement inside a market where official projections still call for a global crude stock build of about 1.4 million bpd in Q1 2026, with risk bands of +200,000 bpd on the upside and -350,000 bpd on the downside. The tape is telling you that risk premium is back, but it is leaning against a visible surplus.

Saudi Pricing: OSP Cuts Pull Asian Barrels into Oil While Testing the Floor

Saudi pricing is the first key lever behind the current CL=F and BZ=F recovery. The flagship Arab Light OSP to Asia has been cut by $0.30/bbl, now set at a premium of $0.30 over the Oman/Dubai average, down from $0.60 for January loadings. That is the lowest premium in more than five years and exactly the type of move Asian refiners were waiting for, having anticipated a cut of $0.10–$0.30. Response was immediate: Asian buyers excluding China ordered an extra 9 million barrels for next month. Saudi producer pricing is not just about Asia. All grades to Asia were reduced by $0.20–$0.30/bbl, U.S. loadings were cut $0.30–$0.40/bbl, and grades to Northwest Europe and the Mediterranean were lowered by about $0.40/bbl. At current Brent (BZ=F) in the low-$60s, Saudi Arabia is deliberately narrowing differentials to defend market share, even though its own fiscal break-even for 2026 is estimated near $86.6/bbl. The message is clear: Riyadh will discount to keep volumes moving, but this is not compatible with a sustained Brent in the $50s without eventually forcing a change in policy.

Geopolitics: Iran Protests and Yemen Tension Put a Floor Under Brent (BZ=F)

The risk premium embedded in BZ=F starts with Iran and Yemen. Nationwide protests in Iran are in their 13th day, combined with an internet blackout across key cities like Tehran, Mashhad and Isfahan. The country remains the 7th-largest crude producer, so markets cannot ignore the chance of disruptions. At the same time, a rift between two of the tightest OPEC partners, Saudi Arabia and the UAE, has intensified in Yemen. The Saudi side accused the Emiratis of aiding a separatist leader and then recaptured the strategic city of Aden. That intra-OPEC friction, layered on top of Iran unrest, has helped push Brent (BZ=F) about $2 higher this week and WTI (CL=F) more than $1 above Monday levels. Added to this, Russia has fired its hypersonic Oreshnik missile at targets in Ukraine including energy infrastructure, reinforcing the perception that energy assets remain embedded in wider conflict. This is the backdrop for Brent around $62–$63 and WTI near $58–$59 despite rising inventories.

Venezuela: From Sanctions Story to Active Supply Lever for Oil

The other structural driver is Venezuela, where the capture of President Nicolás Maduro on January 3 has turned a sanctions story into an active supply lever. The U.S. plans to sell 30–50 million barrels of Venezuelan crude worth roughly $2 billion, directly into the market. Venezuela currently produces around 900,000 bpd. Analysis suggests that with short-term fixes—more diluent, well repairs, reactivation of upgraders and meaningful sanction relief—output could rise by about 400,000 bpd to 1.3 million bpd. That extra 0.4 mbd is roughly half of the global oil demand growth expected in 2026 and is sufficient, on its own, to push the annual average WTI (CL=F) price down by about $2/bbl, from a baseline $52 to $50. The U.S. is positioning itself at the center of this flow. Washington aims to control Venezuela’s oil sales and revenue “indefinitely”, while nearly 20 executives from large producers and refiners have been called to the White House to discuss rebuilding the sector. One major is already loading Venezuelan crude at the fastest pace in seven months, supplying refiners such as Phillips 66, and trading houses are seeking licenses to market up to 50 million barrels of Venezuelan oil sitting in storage after an embargo that included four tanker seizures. Effectively, Venezuelan heavy crude is being redirected toward U.S. refineries at the expense of Chinese buyers, who are now forced to look at higher-cost barrels from places like Canada. For CL=F, that means cheap heavy feedstock to optimized U.S. refineries at exactly the moment the administration wants lower pump prices.

Inventories and the Surplus Argument: Why CL=F Struggles to Break Higher

The bullish narrative—Venezuela regime change, Iran protests, Yemen friction—is colliding with hard supply data. Official projections still show global inventories rising by about 2 million bpd in 2026, with a 1.4 million bpd stock build in the first quarter alone. Analysts warn that unless Iran risk escalates materially, oversupply remains the primary ceiling on Oil. One major bank reports its clients are the most bearish on oil in a decade, despite the latest spike. Recent commentary frames the market as a “dance” between geopolitical risk and growing stocks. The conclusion is straightforward: even with Venezuela uncertainty and Middle East risk, it is difficult to justify a sustained breakout much above the low-to-mid $60s for Brent (BZ=F) and the high-$50s for WTI (CL=F) while storage is filling.

Azeri Light and Differentials: Regional Grades Validate a Soft but Firming Market

Outside the headline benchmarks, regional grades confirm the same picture: rebound, but from a weak base. Azeri Light has climbed by $1.04, or 1.6%, to $65.64/bbl, with FOB Ceyhan pricing at $63.86, up $1.06 (1.69%). March Brent (BZ=F) futures are quoted near $62.93, so Azeri Light trades at a modest premium, consistent with its quality. Importantly, Azerbaijan’s state budget is built on an assumed oil price of $65/bbl. Current Azeri pricing is only marginally above that assumption, which confirms that producer governments still see the current range as fragile rather than comfortable. On the U.S. side, Louisiana Light sits near $57.46 (down 1.64% on the day), Mars US is around $70.06, Bonny Light at $78.62, and the OPEC basket is at approximately $58.76, barely 0.43% higher. These differentials show a curve where quality barrels command a premium, but the entire complex is anchored below $80, far from any true “tight market” pricing.

Tariffs, Demand and the Macro Overlay on WTI (CL=F) and Brent (BZ=F)

Macro policy is injecting additional volatility into Oil without fundamentally fixing the surplus. The U.S. administration has floated tariffs of up to 500% on countries that buy Russian crude, directly targeting buyers such as China and India. At the same time, a bipartisan Russia sanctions bill aimed at penalizing Russian oil buyers is moving through Congress. The intent is clear: pressure Russian exports and reroute barrels. The risk is that aggressive tariffs tighten certain routes while global supply remains sufficient, creating regional dislocations rather than a global deficit. On the monetary side, markets expect the Federal Reserve to begin rate cuts as early as March or June, driven by softer labor data and political pressure. A weaker dollar would typically support CL=F and BZ=F, but demand sensitivities are mixed after a year in which prices still fell ~20% despite sporadic demand strength. The macro setup therefore favors a modest uplift in risk assets but does not override the physical surplus unless supply shocks intensify.

Positioning, ETFs and Rebalancing: How Capital Is Treating Oil Right Now

Capital flows confirm the cautious stance. Commodity index rebalancing is expected to inject fresh capital into Oil, adding mechanical buying interest. At the same time, oil-linked ETFs have rallied as investors hedge futures exposure rather than chase a new uptrend. Index providers and banks report that clients remain structurally cautious, with sentiment skewed to the bearish side even as prices bounce 3–4% on the week. The implication for WTI (CL=F) and Brent (BZ=F) is simple: bounces like the current move toward $59–$63 are being used more for hedging and tactical trades than for building long-term directional exposure. That behavior is entirely consistent with a market where open interest and inventory data point to a surplus regime.

U.S. Shale, Break-Even Levels and the Supply Response Threshold for CL=F

The sustainability of sub-$60 WTI (CL=F) hinges on how U.S. producers react. U.S. supply accounts for roughly 20% of global output, and surveys show that many Permian producers require $61–$62/bbl for WTI to drill new wells profitably. One large Permian operator has already stated that if WTI stays in the “low 50s” for a month, capex cuts would be on the table. That effectively defines a soft floor in the low-to-mid $50s for CL=F: below that, U.S. growth slows, and the surplus starts to correct. On the OPEC+ side, which controls roughly 50% of global supply, current policy is to keep production steady until the end of March. However, with Saudi Arabia’s fiscal breakeven at $86.6/bbl, Brent in the $50s is politically and fiscally uncomfortable. History shows that the kingdom can either cut or flood the market in response to low prices. At present, the discounting of Arab Light and other grades suggests Riyadh is prioritizing volume and market share, but that stance will not be maintained indefinitely if BZ=F remains anchored in the low $60s or lower.

Refined Products, Natural Gas and the Downstream Read-Through from Oil

Downstream pricing supports the view of a market that has regained risk premium but not scarcity. Gasoline trades near $1.788/gal, up about 1.57% on the day, consistent with higher CL=F but not indicating acute shortages. Natural gas sits around $3.271, down roughly 3.99%, reflecting its own supply/demand dynamics and underscoring that the broader energy complex is not tight across the board. In Venezuela, U.S. control of crude flows is set to feed heavy barrels into U.S. refineries optimized for similar streams from Mexico and Canada, easing specific constraints in the U.S. Gulf system. In Asia, Saudi discounts have pulled more barrels into Eastern buyers, while separate Venezuelan fuel oil flows into the U.S. are pushing Asian fuel oil premiums to 8-month highs. These cross-market moves show Oil is repricing regionally based on logistics and grade specifics, not because global supply is genuinely scarce.

Trading View: WTI (CL=F) and Brent (BZ=F) Levels, Bias and Verdict

With WTI (CL=F) oscillating around $59–$59.34 and Brent (BZ=F) near $63–$63.42, the market is trading at the upper half of a range that is still defined by a surplus: inventories are projected to climb by ~1.4 million bpd in Q1 2026 and by about 2 million bpd across the year, Venezuelan supply can add ~400,000 bpd in a relatively short window, and major banks report the most bearish client stance on Oil in a decade. Against that, you have Iran protests in their 13th day, a Saudi-UAE rift in Yemen, hypersonic missile strikes on Ukrainian energy assets, U.S. control of 30–50 million barrels of Venezuelan crude worth $2 billion, and tariffs of up to 500% being threatened on buyers of Russian oil. That mix is enough to keep Brent supported in the low-$60s and WTI around high-$50s, but not enough—yet—to justify a structural breakout.
From a trading stance, the data argue for a Hold on CL=F and BZ=F with a mildly bearish bias into the first quarter. Upside into the $65 area for Brent and $60–$61 for WTI is possible on headline risk, but the balance of evidence—inventory builds, potential Venezuelan growth, cautious institutional positioning and producer break-even levels—favors selling strength above those bands rather than chasing a new up-leg. The market is currently paying you to respect the range and the surplus, not to price in a lasting oil squeeze.

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