Oil prices are set to average below $60 per barrel next year, investment banks have said in their latest forecasts in recent weeks.
In 2026, both Brent Crude and WTI Crude are expected to slip from current levels of $63 per barrel and $60 a barrel, respectively, as the emerging oversupply will overwhelm the market, analysts say.
Geopolitical factors will certainly play into the price of oil next year, and these will be centered on Venezuela, Russia, and Iran.
Despite the many geopolitical uncertainties, the U.S. Energy Information Administration (EIA) and Wall Street banks are looking at the fundamentals and remain bearish on oil for the next year, forecasting prices to average below $60 per barrel in 2026.
The EIA expects, in its latest Short-Term Energy Outlook (STEO), that global oil inventories will continue to rise through 2026, putting downward pressure on oil prices in the coming months. The EIA forecasts the Brent crude oil price will dip to an average of $54 per barrel in the first quarter of 2026, and average $55 a barrel for all of 2026. Still, the EIA’s Brent forecast for 2026 is $3 per barrel higher than in the previous month’s outlook, due to Chinese stockpiling and the intensified sanctions on Russia.
“First, we now assess that China’s ongoing purchases of oil for strategic stockpiling will place more upward pressure on oil prices than we had assumed previously. Second, this forecast recognizes that the recent round of sanctions on Russia’s oil sector could result in less oil production next year than we are currently forecasting,” the EIA said.
Macquarie Group also sees lower oil prices next year, but notes that sanctions on Russia, uncertainty about Venezuela, and U.S. winter weather could slow price declines.
Macquarie analysts believe that OPEC+ would have to implement production cuts in the second half of 2026 to steady the market amid an expected drop in prices, according to the bank’s latest quarterly forecast carried by World Oil.
ABN AMRO Bank said in its Energy Market Outlook 2026 that weak global demand growth and rising OPEC+ and non-OPEC+ supply have resulted in an oversupplied market. Prices haven’t plunged due to China’s stockpiling efforts and geopolitical uncertainties, said Moutaz Altaghlibi, senior energy economist at ABN AMRO Bank.
“All in all, we anticipate the supply glut—caused by weaker demand growth and increasing supply—to persist throughout 2026, with its impact steadily pushing crude prices lower,” Altaghlibi said.
ABN AMRO forecasts Brent crude to average $58 per barrel in the first quarter of 2026, gradually falling to $52 a barrel as the glut worsens, and ultimately reaching $50 per barrel by the end of the year, with a year average of $55 per barrel.
Ole Hvalbye, commodities analyst at SEB bank, said last week, “We continue to see the path of least resistance as skewed to the downside.”
“Rising tension between Washington and Venezuela is adding a small geopolitical premium, although not enough to offset the broader bearish backdrop of rising supply and a market leaning deeper into surplus,” Hvalbye said.
Other banks and analysts concur that the glut will be the key theme in fundamentals next year.
Related: OPEC+’s Strategic Pause Signals a Shifting Oil Power Balance
Oversupplied markets will keep oil prices under pressure next year, and the U.S. benchmark will average below $60 per barrel, the monthly Reuters poll of analysts and economists showed at the end of November.
WTI Crude is expected to average $59 per barrel in 2026, and Brent Crude, the international benchmark, is set to average $62.23 per barrel next year, down from $63.15 forecast in the Reuters poll in October.
Goldman Sachs sees a large surplus on the market, with WTI Crude expected to average $53 per barrel in 2026.
The oil market is set to rebalance in 2027 as 2026 will see “the last big oil supply wave the market has to work through,” Daan Struyven, co-head of global commodities research at Goldman Sachs, told CNBC last month.
Fundamentals point to lower oil prices next year, but geopolitical shocks are lurking around the corner, from Russia to Venezuela.
A loss of Venezuelan oil production in case of a U.S. military intervention will materially impact global benchmark prices as the market will have to replace Venezuela’s heavy crude—the bulk of Caracas’ crude exports, according to Rystad Energy. A potential tightening of the global heavy crude market could push up the price of the Dubai benchmark against ICE Brent as China will scramble to replace the lost Venezuelan barrels, the analysts said last week.
By Tsvetana Paraskova for Oilprice.com
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