Swelling Supply to Keep Oil Prices Under Strain in 2026

U.S. crude is projected to average $59.00 per barrel, below last month’s expectation of $60.23.

“The crude oil market in 2026 is expected to be marked by a large and unprecedented global oversupply,” said Zain Vawda, analyst at MarketPulse by OANDA.

However, “ongoing political risks will maintain a crucial risk premium, essentially preventing the price from dropping as low as the high supply would otherwise suggest.”

Analysts largely expect the oil market to see a surplus in 2026, with estimates ranging anywhere from 0.5–4.2 million barrels per day, compared with 0.19–3.0 mbpd in the previous poll.

Forecasts from the International Energy Agency imply a market surplus of 4.09 mbpd in 2026, while OPEC’s recent monthly report implied a 20,000 bpd surplus if the wider group keeps pumping at October’s rate, according to a Reuters calculation based on the report.

OPEC+ has boosted output targets by around 2.9 million bpd since April, but plans to pause production hikes in the first quarter of 2026. Brent is expected to average $61.23 during that period, the poll showed.

Poll participants widely believe OPEC+ will avoid aggressive production hikes in 2026, given persistent oversupply concerns.

On the flip side, “we remain very sceptical about the group reversing the unwinding and cutting again. We expect it to consider doing so only if Brent remains below $55/barrel for a prolonged period,” said Kim Fustier, head of European oil & gas research at HSBC.

Global oil demand, meanwhile, is expected to grow by 0.5–1.2 mbpd in 2026, the poll showed.

Analysts expect U.S. shale output to decline in 2026, which coupled with geopolitical risks “should put a floor under prices of about $60/barrel,” said Matthew Sherwood, lead commodities analyst at EIU.

U.S. sanctions on Russia’s two largest oil companies, Lukoil and Rosneft, could lead to brief disruptions in supply but are unlikely to have a sustained impact on the market, analysts said, with Russian barrels expected to re-enter markets via shadow fleets and intermediaries.

Peace talks could eventually bring more barrels back to market, adding to supply pressure, analysts noted.

(Reporting by Anushree Mukherjee in Bengaluru Editing by Ros Russell)