Outlook for Crude Oil 2026

Many experts and observers in the crude oil arena are forecasting an oversupply in 2026, leading to an oil glut driven by rising supply and weaker demand. 

Price Forecast and Supply Glut

Analysts suggest that the price of Brent Crude will average US$58 bbl (1 barrel). In Q1 of 2026, as the glut gets larger, the price will gradually fall to US$52 bbl and end the year at US$50 bbl, giving an average price for the year of US$55 bbl. 

Indeed, the IEA (International Energy Authority) has estimated that there will be a record oil glut or surplus (estimated at 4 million b/pd – barrels per day) next year, with demand growth remaining subdued as OPEC+* continues to revive supplies.

*OPEC+ – is short for the Organisation of the Petroleum Exporting Nations and is a coalition of 23 oil-producing countries, of which the full members are Algeria, Equatorial Guinea, Gabon, Iran, Iraq, Kuwait, Libya, Nigeria, Republic of the Congo, Saudi Arabia, United Arab Emirates and Venezuela. There are a further 10 non-OPEC Partner Countries that form the OPEC+ and make up the DoC (Declaration of Cooperation), consisting of Azerbaijan, Bahrain, Brunei, Kazakhstan, Malaysia, Mexico, Oman, Russia, South Sudan and Sudan. The whole group’s modus operandi is to cooperate to influence the global oil market and stabilise prices.

The Market’s Muted Response to Geopolitical Risk

Several experts have voiced surprise at the lack of volatility in the crude oil market in 2025, despite the many supply and geopolitical risks. Key events such as Russian oil sanctions, plus Israeli and the United States strikes on Iran, had many analysts expecting major volatility given the potential to lose Iranian oil supplies. However, the market showed a complete lack of volatility, and Brent even had a small but brief rally, hitting US$80 bbl. Experts suggest that there is fatigue within the market, especially after Russia invaded Ukraine in February 2022, so volatile market reactions to explosive geopolitical tensions appear to have been muted. It is therefore being predicted that with a market glut continuing into 2026 and the large amount of spare capacity in Saudi Arabia, there will be little impact on oil supplies, with prices falling as mentioned above.

OPEC+’s Strategic Shift

In April, OPEC+ shifted its strategy from supporting high oil prices through production cuts to increasing output to regain market share from non-OPEC+ producers such as Brazil, Guyana, and the United States. Indeed, the market was taken by surprise when a series of production increases added a total increase of 2.9 billion b/pd, contributing to the downward pressure on prices, which, as stated above, is expected to keep going south well into 2026. 

Experts say the policy shift was driven by several external factors, including diplomatic pressure from the White House and unexpected geopolitical events such as the Iran–Israel war and sanctions on Russian oil. The later sanctioning of major Russian producers Lukoil* and Rosneft** also provided an unexpected buffer against a sharper price collapse.

*Lukoil – Engages in the exploration, production, refining, marketing and distribution of oil and gas in both Russian and international markets. Lukoil is owned by private shareholders, with its founder, Vagit Alekperov, holding circa 28.3%.

**Rosneft – A vertically integrated energy company specialising in the exploration, production, refining, transportation, and sale of petroleum, petroleum products and LNG. The Russian Government owns circa 40.4% of the company, with the QIA (Qatar Investment Authority) also owning a significant stake.

Demand and The Fiscal Breakeven Point

Analysts suggest that in 2026, there will be a modest increase in oil demand at circa 800 b/pd, which is expected to be driven by non-OECD (Organisation for Co-operation and Economic Development) countries, especially Asia, which is calculated to make up 50% of demand, whilst China’s demand is expected to be under 200 b/pd. 

In effect, many analysts and commentators agree that 2026 will be a challenging year for oil prices due to overwhelming supply, with large surpluses potentially building, unless OPEC+ makes significant production cuts or geopolitical events disrupt supply chains. Another factor to consider is how long OPEC+ nations are willing to tolerate low oil prices. With an average price of USD $55 per barrel forecast for 2026 and Saudi Arabia’s fiscal break-even at around USD $90 per barrel, any decision to cut production could put upward pressure on prices later in the year.