Analysts have said the emerging oversupply of oil will overwhelm the market
Oil prices are projected to fall below an average of $60 per barrel, according to the latest forecasts from investment banks.
Both Brent Crude and West Texas Intermediate (WTI) Crude are expected to decline from their current levels of $63 per barrel and $60 per barrel, respectively, in 2026.
Analysts say that the emerging oversupply will overwhelm the market.
Despite ongoing geopolitical uncertainties, the US Energy Information Administration (EIA) and Wall Street banks remain focused on fundamentals and maintain a bearish outlook for oil in the coming year, forecasting prices to average below $60 per barrel in 2026.
According to the latest EIA Short-Term Energy Outlook (STEO), global oil inventories are expected to continue rising through 2026, putting downward pressure on prices in the months ahead.
Oil prices rise by 4% amid new US sanctions on Russian oil giants
The EIA forecasts Brent crude will dip to an average of $54 per barrel in the first quarter of 2026 and average $55 per barrel for the year.
The agency’s Brent forecast for 2026 is $3 per barrel higher than last month’s outlook, reflecting Chinese stockpiling and 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.
WTI Crude is expected to average $59 per barrel in 2026, while Brent Crude, the international benchmark, is projected to average $62.23 per barrel, down from $63.15 in the Reuters poll conducted in October.
However, geopolitical factors will continue to influence oil prices next year, particularly developments in Venezuela, Russia, and Iran.
SP/MA
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