BNP Paribas commodities analyst Jason Ying expects Brent to fall to $55 a barrel in the first quarter before recovering to $60 a barrel through the rest of 2026, as supply growth is expected to normalize while demand remains flat.“The reason we are more bearish than the market in the near term is that we think US shale producers have been able to hedge at high levels,” he said.
“So supply from shale producers will be more consistent and insensitive to price movements.”
U.S. West Texas Intermediate crude was at $58.06, up 11 cents, on track for a 19% annual decline. Average prices for both benchmarks in 2025 are the lowest since 2020, LSEG data shows.
Oil markets got off to a strong start to 2025 as former President Joe Biden ended his term by imposing tougher sanctions on Russia, disrupting supplies to top buyers China and India. The war in Ukraine intensified as Ukrainian drones damaged Russia’s energy infrastructure and disrupted Kazakhstan’s oil exports. The 12-day conflict between Iran and Israel in June threatened shipping in the Strait of Hormuz, a major oil chokepoint, fueling oil prices.
In addition to geopolitical tensions, OPEC’s top producers, Saudi Arabia and the United Arab Emirates, are embroiled in a conflict over Yemen. US President Donald Trump has ordered a blockade of Venezuelan oil exports and threatened a new attack on Iran.
But prices cooled after OPEC+ accelerated production increases this year and concerns about the impact of US tariffs weighed on global economic growth and fuel demand growth.
OPEC+
The Organization of the Petroleum Exporting Countries and its allies have halted oil production increases for the first quarter of 2026 after releasing about 2.9 million barrels a day since April. The next OPEC+ meeting is on January 4.
Most analysts expect supply to exceed demand next year, with estimates ranging from the International Energy Agency’s 3.84 million barrels per day to Goldman Sachs’s 2 million barrels per day.
“If the price really falls substantially, I would imagine there will be some cuts (from OPEC+),” said Martijn Rats, Morgan Stanley’s global oil strategist. “But it probably needs to drop a lot further from here — maybe into the low $50s.”
“If today’s price simply prevails, they will likely continue to unwind these cuts after the first quarter break.”
John Driscoll, director of consultancy JTD Energy, expects geopolitical risks to support oil prices despite fundamental data pointing to oversupply.
“Everyone says it will get weaker in 2026 and even beyond,” he said. “But I wouldn’t ignore the geopolitics and the Trump factor because he wants to be involved in everything.”
“We live in a powder keg and I think this is your ultimate floor,” he added.
#Oil #rising #Brent #track #longest #period #annual #losses