Rising supply and geopolitical risks to limit deeper losses will keep oil prices under pressure in 2026
Oil prices are likely to remain under pressure in 2026 as rising supply overshadows demand growth and geopolitical risks, likely to limit deeper losses. Brent crude is expected to average $62.23 per barrel in 2026, and WTI crude is expected to average $59 per barrel in 2026.
The crude oil market is expected to witness a large and unprecedented global oversupply in 2026.
However, ongoing political risks will prevent prices from falling as much as the high supply suggests, creating a critical risk premium.
While the International Energy Agency (IEA) forecasts a market surplus of 4.09 million barrels per day in 2026, OPEC's latest monthly report points to a surplus of 20,000 barrels per day if the broader group maintains its October production pace.
OPEC+ has raised its production targets by approximately 2.9 million barrels per day since April but plans to halt production increases in the first quarter of 2026. Brent crude is expected to average $61.23 during that period, according to forecasts.
Market participants believe OPEC+ will avoid aggressive production increases in 2026 due to ongoing supply concerns and are highly skeptical that the group will reverse its production cuts and resume further cuts. This is expected to be considered only if Brent crude remains below $55 per barrel for an extended period.
Global oil demand is expected to increase by 0.5-1.2 million barrels per day in 2026.
Analysts expect US shale oil production to decline in 2026. This, combined with geopolitical risks, could lead to prices falling below approximately $60 per barrel.
Analysts noted that US sanctions imposed on Russia's two largest oil companies, Lukoil and Rosneft, could cause short-term supply disruptions but are unlikely to have a lasting impact on the market.
Analysts noted that peace talks could ultimately bring more barrels to the market, increasing supply pressure. Russian barrels are expected to re-enter the market through shadow fleets and brokers.
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