Threats at sea and onshore: what will affect the oil market in 2026

Over the past three weeks, investment banks have reduced their forecasts for the price of Brent oil for 2026 and 2027, according to Bloomberg consensus data, which were reviewed by Oninvest. The average expected oil price for 2026 decreased by 1.6% to $61.9, and for 2027 - by 2% to $66.5. Deutsche Bank has the most pessimistic forecast for next year among investment banks - $55 per barrel.

JPMorgan analysts, for example, believe that the average price of Brent in 2026 will be $58, and will end the year at a level below $50. But JPMorgan strategist Natasha Kaneva did not rule out that the oil price could fall to $30 per barrel by the end of 2027: oil companies are producing crude oil at a record pace, and demand is not keeping up with supply.

Goldman Sachs also plots a decline to $56 per barrel next year and expects prices to return to $80 per barrel (i.e. to the level of the beginning of 2025) only three years later, in 2028.

"We continue to recommend investors to short term spreads on the Brent price between the third quarter of 2026 and December 2028, oil producers to hedge downside risks in 2026, and consumers to hedge upside risks from 2028," the bank's analysts wrote on Nov. 26.

Oninvest studied the latest thematic materials of Goldman Sachs, JPMorgan and BofA. What, in their opinion, will affect the oil market.

One of the main risks for oil prices in the near term is related to the negotiation process between Russia and Ukraine. Goldman Sachs emphasizes that information about the resumption of negotiations led to a 5% decline in Brent during the week to $62, as market participants began to lay down the likelihood of an easing of the sanctions regime for Russia.

The bank forecasts a $4-5 decline in the Brent price in the baseline scenario over the next two years and a $9 decline if Russian production quickly recovers by 2027. In the baseline scenario, the Bank assumes that sanctions on the Russian oil sector will remain in place and considers possible downside risks to oil prices in the event of a hypothetical peace agreement.

The second key factor for the oil market is oversupply. JPMorgan analysts point out that global oil supply is growing three times faster than demand in 2025, and it will be the same in 2026. This gap will lead to the formation of a structural surplus of about 2.8 million barrels per day in 2026.

Both Goldman Sachs and BofA write that the threat to the balance of the market now are the stocks of oil "on the water" (that is delivered by sea). They have increased by almost 250 million barrels since mid-August, to about 1.4 billion, BofA said. This volume will sooner or later get into onshore storage facilities.

These reserves include accumulated Russian oil. It goes mainly to Asia, which has increased the average transportation distance, and about 80 million barrels have accumulated in floating storage since 2022, according to Goldman Sachs. If these stocks start to return to Europe, prices could fall.

BofA provides an explanation as to why so far the huge increase in inventories has not led to a sharp drop in oil prices or a significant rise in freight rates. The fact is that offshore oil shipments are slowing and becoming more complex: new sanctions against Russia (the US imposed them at the end of October) have probably caused a significant realignment of freight rates. And shipping data in the Malacca Strait area shows significant congestion. All this leads to slower traffic speeds and the need to deliver via longer routes.

BofA believes the oil market will face an oversupply until at least 2027.

But at the same time, analysts of this bank write, even with excess supplies, the market remains surprisingly stable, including thanks to the actions of China. BofA emphasizes that in recent years, China has actually redistributed global oil reserves, buying a large volume of excess barrels for its strategic reserves. But such demand can absorb short-term excesses, and China's slower economic growth and industry slowdown could curb consumption and oil prices.

OPEC+ actions also play their role. In 2025, the cartel began to restore production volumes at an accelerated pace after a period of voluntary cuts. But at a meeting in early November, Saudi Arabia, Russia, Iraq, UAE, Kuwait, Kazakhstan, Algeria and Oman agreed to suspend production growth in the first quarter of 2026, freezing it at December 2025 levels. They cited seasonal factors.

The next meeting of OPEC+ and G8 cartel ministers will be held on Sunday, November 30.

This article was AI-translated and verified by a human editor