Weak Dollar and Geopolitics Push Brent Crude Above $65 a Barrel

The global oil market is showing contradictory dynamics at the end of January 2026. Against the backdrop of the dollar weakening to seven-month lows, prices for Brent crude have risen above the $65 per barrel mark. However, this rise is occurring amid persistent fundamental risks—from fears of market oversupply to a sharp drop in demand for Russian oil. Investors are trying to balance short-term geopolitical factors with long-term inventory data.

The Dollar as a Growth Engine

The key driver of the current rally has been the unprecedented weakness of the US currency. As reported by Bloomberg, the Bloomberg Dollar Spot Index hit its lowest level this year. This made dollar-denominated commodities, including oil, cheaper for buyers using other currencies, stimulating demand. Simultaneously, US stock futures dipped as global turbulence forced investors to diversify assets and investment geography.

“A weakening dollar is a classic support mechanism for commodity markets. But in the current situation, it is important to understand that this is more of a currency trend than an oil trend,”

agency analysts comment.

Geopolitics Supports Prices, But the Foundation is Shaky

Operational disruptions and regional conflicts have also contributed to the rise. Tensions between Venezuela and Iran, along with ongoing supply disruptions from Kazakhstan, where production at the key Tengiz and Korolev fields has yet to resume, are creating a ‘risk premium’ in the price.

However, these factors are counteracted by more powerful fundamental trends. According to the latest assessment by the International Energy Agency (IEA), global oil inventories could increase by 3.7 million barrels per day in 2026. In the US, nationwide commercial crude oil inventories are rising for the second week in a row, heightening fears of the market moving towards a state of oversupply. The IEA itself, however, warns that the actual surplus may not reach forecast levels.

Contrast with Russian Urals: Demand Collapsed, Prices Crashed

The most telling contrast in the market has been the fate of Russian oil. Industry analysts note that on January 22, prices for the flagship Urals grade, which China buys up, fell to an unprecedented low. The reason is a sharp reduction in imports from India, where demand for Russian oil has fallen to a three-year low.

Oil exports from Russia overall have declined to their lowest level since August 2025. This crashed the price of Urals and made China virtually the only available sales market, depriving Moscow of room for maneuver and increasing price pressure. The divergence in dynamics between Brent and Urals clearly shows how geopolitics and sanctions are segmenting the global market, creating separate pricing realities.

What This Means for Ukraine’s Economy

For Ukrainian businesses and regulators, the current situation carries a dual signal. For Western companies considering investments in Ukrainian energy or logistics, the stability of Brent prices, coupled with pressure on Russian export revenues, could signal a favorable long-term strategic environment despite short-term volatility.

1. Short-term stability. A moderate rise in the price of Brent, if not underpinned by new conflicts, could curb a sharp increase in fuel prices on the domestic market in the coming weeks.
2. Long-term pressure. The collapse in prices for Russian Urals and the reduction in Russia’s export earnings theoretically weaken the aggressor’s financial capacity to wage war, which is a strategically important factor.
3. Currency risks. The weakness of the dollar, on the one hand, may somewhat cheapen import purchases. On the other hand, it adds uncertainty to exchange rate forecasting for companies working with foreign trade contracts.

Forecast: Fragile Equilibrium

The current price increase looks fragile and is driven more by currency speculation and local disruptions than by healthy demand. The market is balancing on a knife-edge: on one side—a weak dollar and geopolitics; on the other—growing inventories and recession fears in key economies.

For investors and traders, this means volatility will persist. Any positive macroeconomic data from the US that strengthens the dollar could quickly reverse the trend. At the same time, further escalation in the Caspian region or the Middle East could give prices a new impetus. The main question remains open: can the global economy absorb the volume of oil producers plan to extract, or is the market indeed facing a period of surplus with all the ensuing consequences for prices.

*The average UAH/USD exchange rate on January 23, 2026: 43.20 hryvnias per 1 US dollar. Equivalent approx. £50.82 (GBP) or CA$86.95 (CAD) per barrel. Presented information is not financial advice.