Rising geopolitical tensions and increasing volatility in crude oil prices are affecting the EUR/NOK exchange rate. This situation suggests the Norwegian krone (NOK) might strengthen due to concerns about oil supply. Société Générale points out that since September, this currency pair has been closely tied to changes in the oil market, with issues in the Americas and Iran causing fluctuations in crude prices. If Iran’s oil supply is disrupted, prices could rise by at least $15 per barrel, which would likely strengthen the NOK. In December, Norway’s inflation rate hit 3.1%, higher than the expected 3.0%. This has led the central bank to adopt a cautious approach. Persistent inflation reduces the likelihood of significant interest rate cuts, with markets anticipating only a small cut in the first half of the year.

NOK/SEK Exchange Rate

The NOK/SEK exchange rate is currently just above 0.91, suggesting a potential support level for the krone. This means the NOK may not be very vulnerable at this point. The central bank’s careful stance is expected to help the NOK remain strong, even though growth forecasts are below normal levels. As of January 14th, 2026, the renewed connection between oil prices and the NOK creates a clear opportunity. Brent crude is now priced above $78 per barrel, a level we haven’t seen consistently since late 2025. This situation may lead to a stronger NOK against the euro, driven by ongoing geopolitical risks that are adding extra pressure on energy markets. Given the potential for supply disruptions, traders might consider buying put options on the EUR/NOK pair to bet on a decrease in the exchange rate with limited risk. Historical data from earlier periods of oil market stress in 2022 shows that a quick $15 rise in crude often led to a 2-3% strengthening of the krone in the following weeks. Implied volatility on EUR/NOK options has already risen to a three-month high of 9.2%, indicating that the market anticipates a significant movement.

Norway’s Domestic Policy

Norway’s domestic policy outlook is also positive. The unexpected rise in inflation to 3.1% in December suggests that Norges Bank is unlikely to cut interest rates soon. This approach contrasts with the European Central Bank, which is facing signs of slower growth, particularly after last week when German industrial orders fell short of expectations. This difference in policy is likely to support the NOK against the euro. It is also important to note that the krone’s weakness against the Swedish krona appears to have stabilized around the 0.91 level, which has served as a strong support point for over two years. This indicates that the NOK’s downside risk is limited, making long positions in NOK safer. This support level for NOK/SEK helps contain the overall risk of significant krone vulnerability. Create your live VT Markets account and start trading now.

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