Oil prices are projected to average below $60 per barrel next year, according to recent forecasts from major investment banks and global energy analysts. Both Brent Crude and WTI Crude, currently trading at around $63 and $60 per barrel respectively, are expected to decline as rising supply outpaces global demand.
Geopolitical developments involving Venezuela, Russia, and Iran are anticipated to influence market sentiment; however, analysts emphasize that underlying market fundamentals will be the primary drivers of price movements in 2026.
The U.S. Energy Information Administration (EIA), in its latest Short-Term Energy Outlook, forecasts that global oil inventories will continue increasing through 2026, exerting downward pressure on prices. The agency projects Brent crude to average $54 per barrel in the first quarter of 2026 and $55 per barrel for the year overall. This updated outlook is slightly higher than previous estimates, due to ongoing Chinese strategic stockpiling and intensified sanctions on Russia.
The EIA noted, “China’s ongoing purchases for strategic reserves are likely to exert more upward pressure on prices than previously assumed. Additionally, new sanctions on Russia could reduce oil production more than our current forecasts indicate.”
Macquarie Group also expects weaker prices next year but acknowledges that geopolitical uncertainties—particularly related to Russia and Venezuela, as well as U.S. winter weather—could slow the rate of decline. The firm suggests that OPEC+ may need to introduce production cuts in the second half of 2026 to stabilize the market.
ABN AMRO’s Energy Market Outlook 2026 similarly highlights weak demand growth and increased supply from both OPEC+ and non-OPEC producers, pointing to a persistent supply glut. Senior energy economist Moutaz Altaghlibi notes that although Chinese stockpiling and geopolitical risks have prevented a sharper price drop, the oversupply is expected to deepen throughout 2026. The bank forecasts Brent crude to average $58 per barrel in the first quarter and fall to $50 per barrel by year-end, with an annual average of $55.
Analysts at SEB echo these sentiments, stating that market conditions remain strongly tilted toward lower prices. While rising tensions between the U.S. and Venezuela may add a slight geopolitical premium, it is not expected to offset broader bearish fundamentals.
A Reuters poll of analysts at the end of November reinforces the outlook for a supply-heavy market. WTI Crude is expected to average $59 per barrel in 2026, while Brent Crude is forecast to average $62.23, slightly lower than earlier projections.
Goldman Sachs anticipates an even larger surplus, projecting WTI to average $53 per barrel next year. According to the bank, 2026 represents “the last major supply wave” before the market begins rebalancing in 2027.
Despite the bearish forecasts, potential geopolitical shocks remain a key variable. Analysts warn that any significant loss of Venezuelan supply—particularly under a possible U.S. intervention—could sharply impact global heavy crude markets. Such disruptions could push up Dubai benchmark prices relative to Brent, especially as China seeks alternative sources for heavy crude to replace Venezuelan barrels.
Overall, analysts agree that rising supply and weak demand growth will dominate the oil market in 2026, keeping prices under sustained pressure even as geopolitical risks linger.
Source: Theghanareport
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