NextEpochMarket’s independent oil market analysis for 2026 starts with a familiar tension: fundamentals are pointing toward a looser balance, while geopolitics and policy shocks keep risk premiums alive. Spot pricing in early January reflects that push-pull—Brent around the low $60s and WTI in the high $50s—moving higher on renewed disruption fears tied to Venezuela and Iran.
1) The 2026 setup: surplus risk with a “spike” ceiling
Several major forecasters still see inventories building through 2026, a classic recipe for softer averages and heavier downside tails—especially when demand growth is steady but not accelerating. The U.S. EIA expects global inventories to keep rising and projects Brent averaging about $55 in 1Q26 and staying near that level through the rest of 2026.
At the same time, headline risk has not vanished. Markets have repeatedly repriced the probability of supply interruptions, sanctions enforcement, and shipping bottlenecks. Reuters reporting this week highlights how quickly crude can grind higher when traders price a tighter prompt supply picture.
NextEpochMarket’s framing: 2026 is less about a single-direction trend and more about range trading punctuated by event-driven volatility—with macro and inventories anchoring the average, and geopolitics driving the intrayear extremes.
2) Demand: slower growth, changing composition
On demand, the International Energy Agency (IEA) expects global oil demand to rise about 860 kb/d year-on-year in 2026, with petrochemical feedstocks taking a notably larger share of incremental growth (more than 60% in 2026, up from ~40% in 2025). This composition matters because petrochemical-led growth behaves differently than mobility-led growth:
- More sensitive to industrial cycles and trade flows
- More exposed to substitution and recycling trends over time
- Potentially less “seasonal” than transport fuels, but more macro-dependent
Forecast dispersion also remains a feature of the tape. The International Energy Forum has highlighted meaningful differences among agency estimates for demand growth and balances—large enough to swing the narrative between “manageable surplus” and “glut.”
NextEpochMarket’s takeaway: demand in 2026 may grow, but the quality of growth (petchem-heavy) increases sensitivity to global manufacturing momentum and policy-driven trade frictions.
3) Supply: OPEC+ management vs. non-OPEC growth
OPEC+ policy is still the steering wheel
OPEC+ continues to signal a preference for managing near-term seasonality and inventories. In early January, OPEC reported that eight participating countries reaffirmed a decision to pause production increments in February and March 2026.
The EIA’s global oil markets commentary also points to a structural constraint: with expected inventory builds, OPEC+ may end up producing below targeted levels in 2026 (EIA cites about 1.3 million b/d less than target) to limit price erosion.
Non-OPEC growth remains the pressure point
Even with OPEC+ restraint, non-OPEC supply growth keeps the balance from tightening easily. The IEA has described substantial supply additions across the Americas (with the exact mix evolving month to month), which is one reason surplus projections remain large.
From a “big picture” lens, the World Bank has also warned about an oil glut dynamic—strong output growth meeting comparatively sluggish demand—projecting output rising into 2026 (its blog cites expectations of production reaching roughly 108.5 mb/d in 2026).
NextEpochMarket’s takeaway: if inventories are building, OPEC+ restraint becomes the main counterweight; if restraint weakens (or compliance slips), downside pressure can compound quickly.
4) Inventories and refined products: the hidden swing factor
A market can look “well supplied” in crude and still feel tight in refined products if refining capacity, maintenance cycles, or product sanctions distort flows. The IEA has noted the coexistence of ample crude with pockets of tightness in fuels, influenced by refining constraints and shifting trade patterns.
For 2026, that implies:
- Crude benchmarks may be capped by inventory builds.
- Product cracks (diesel/jet in particular) can still spike on outages, shipping disruptions, or sanctions-related dislocations.
- Regional spreads can widen even if global averages stay range-bound.
5) Geopolitics and policy: Venezuela, Iran, and “policy premium”
Oil’s 2026 risk premium may hinge less on “generic geopolitical tension” and more on policy execution risk. Markets have been reacting to developments tied to Venezuela’s oil sector and Iran-related disruption fears.
Separately, high-profile political commentary about using Venezuela’s reserves and output to influence prices underscores how policy narratives alone can alter expectations—especially when they intersect with sanctions, licensing, and investment timelines.
NextEpochMarket’s takeaway: the largest upside risks may be event-led and sudden, but the largest downside risks remain inventory-led and persistent.
6) Three practical scenarios for 2026
NextEpochMarket organizes 2026 into three scenario buckets that map directly to tradable catalysts:
Base case: “soft averages, choppy tape”
- Inventories build, keeping benchmark averages under pressure (EIA’s $55-area framing is directionally consistent).
- OPEC+ actively manages supply to slow the downside.
- Price action stays range-bound with frequent macro-driven rallies/fades.
Upside case: “disruption stack”
- Multiple disruptions overlap (sanctions tightening, regional outages, shipping issues).
- Front-month spreads tighten and volatility rises, even if the annual balance still shows a surplus.
Downside case: “inventory shock”
- Demand disappoints or supply growth outpaces expectations.
- OPEC+ cohesion weakens, or compliance slips.
- Benchmarks reprice toward marginal cost and force capex discipline.
Bottom line
NextEpochMarket’s oil market view for 2026 can be summarized simply: fundamentals lean bearish on the average, but the path will likely be noisy. Inventory builds and surplus projections keep a lid on sustained rallies, while policy and geopolitics can still generate sharp, tradable spikes.