Amena’s view
The past year has been characterized by uncertainty: US President Donald Trump’s return to the White House injected fresh volatility into global oil markets at a time of already heightened geopolitical tensions. New rounds of sanctions on major exporting states including Iran, Russia, and Venezuela, reinforced this feeling. Next year’s midterms could add another layer of complexity, as the Trump administration has a strong incentive to do what it can to keep gas prices low.
Yet as we head into 2026, the most important factor in the oil market remains the age-old balance of supply and demand.
The first quarter of next year is expected to be challenging. Supply typically builds during this period, and the OPEC+ group of crude exporters has already taken preemptive steps by pausing the unwinding of its production cuts for the full three months: They hope that demand will strengthen in the second and third quarters, helping support prices and allowing the group to return to its original plan of fully unwinding the cuts. At Kpler, we expect oil demand in 2026 to grow by around 1.3 million barrels a day, compared with about 1 million barrels a day of growth in 2025.
This year, the eight OPEC+ members that enacted voluntary cuts chose to accelerate the return of their barrels during the summer season. They did so while simultaneously absorbing some of that added supply within domestic markets during peak heat in the Middle East. This strategy helped maintain cohesion within the group and prevented the additional barrels from creating distortions in market fundamentals.
The months ahead, however, will bring new challenges, particularly around the extent to which US sanctions will limit exports from Iran, Russia, and Venezuela.
Our outlook for prices suggests that Brent — currently selling at about $60 a barrel — will remain in the low $60s during the first quarter, before rising toward the mid-to-high $60s by the year-end.
Next year also marks an important institutional milestone for OPEC+. After decades of debate, the group is moving forward with a unified system to assess each member state’s maximum sustained capacity. The issue has long been contentious because inflated capacity claims influence internal negotiations and create complications for market players in distinguishing real supply from so-called “paper barrels.”
The goal of the new system is to reward members that have invested in expanding and maintaining upstream capability. But it will also reveal how limited global spare capacity has become. When spare capacity falls below 2% of global liquids demand, prices tend to rise sharply and markets become more vulnerable to even minor disruptions.
Looking beyond next year, the global oil system faces a widening gap between rising demand and the slow pace of new supply additions. Depletion rates remain high across many well-explored fields, and relatively few large-scale projects are coming online to offset these declines. A supply crunch appears increasingly likely.
Countries with the ability to increase and sustain production will be positioned to benefit from higher prices. The rest of the world will face the challenge of adjusting to a market that operates with very little margin for error.
Amena Bakr is the Head of Middle East Energy & OPEC+ research at Kpler, an independent global commodities trade intelligence company.
Notable
- The International Energy Agency recently raised its prediction for global oil demand growth in the year ahead, offering limited hope for Gulf producers dealing with weak prices.