Extremely pessimistic and highly unstable international oil market in 2026

In its December 11, 2025, Monthly Oil Market Report (Issue No. 12 of 2025), OPEC projected that global oil demand in 2026 would rise by 1.38 million barrels per day (bpd) year-on-year—an increase of 80,000 bpd over 2025—supported by sustained economic and petrochemical activity in major consuming countries, which will bolster demand for transport fuels and distillates. Among OECD countries, oil demand is expected to rise by approximately 20,000 bpd, primarily driven by OECD Americas; demand in OECD Europe is projected to grow slightly, while OECD Asia-Pacific is expected to remain sluggish. Among non-OECD countries, oil demand growth is forecast to exceed 1.2 million bpd in 2026, propelled mainly by India, China, the Middle East, and Latin America, and further supported by growth across other Asian nations. In its Short-Term Energy Outlook report (Issue No. 12 of 2025), released on December 9, 2025, the U.S. Energy Information Administration (EIA) estimated global oil demand growth in 2026 at 1.2 million bpd—100,000 bpd higher than in 2025—with virtually all growth originating from non-OECD countries: India’s oil demand is projected to rise by 170,000 bpd, the Middle East’s by 100,000 bpd, and Africa’s by 150,000 bpd. On the supply side, although forecasts from various institutions differ significantly, there is broad consensus that global oil supply will increase substantially in 2026. The International Energy Agency (IEA) projects global oil supply will rise by 2.4 million bpd in 2026, reaching a total of 108.6 million bpd—comprising a 1.2-million-bpd increase from non-OPEC producers (mainly the U.S., Canada, Brazil, Guyana, and Argentina) and a 1.3-million-bpd increase from OPEC+ producers. OPEC forecasts non-OPEC oil production will rise by 600,000 bpd in 2026, reaching 54.8 million bpd; meanwhile, OPEC+’s natural gas liquids and unconventional oil output is expected to climb by 100,000 bpd, reaching 8.8 million bpd. The EIA estimates that following a sharp 3-million-bpd supply increase in 2025, global oil supply will rise another 1.2 million bpd in 2026, reaching 107.43 million bpd. It is precisely this mismatch between demand and supply growth that leads many international institutions to conclude that the global oil market in 2026 will suffer severe supply-demand imbalances. In its December 11, 2025, Oil Market Report, the IEA stated that global oil supply in 2026 will exceed demand by 3.815 million bpd—a record high. In early December 2025, five Wall Street institutions—Bank of America, Citigroup, Goldman Sachs, JPMorgan Chase, and Morgan Stanley—warned that the global crude oil market would face significant oversupply in 2026, with their average forecast indicating an oversupply of 2.2 million bpd. In its report released on December 9, 2025, global commodity trading giant Trafigura Group stated that as new supply enters the international crude oil market in 2026 amid an economic slowdown, the international oil market will enter a 'super oversupply' scenario.

Morgan Stanley downgrades oil price forecasts again: market to return to oversupply in 2027

Morgan Stanley has downgraded its crude oil price forecasts for the second time in roughly two weeks, warning that the global oil market is accelerating toward oversupply. Faster-than-expected resumption of traffic through the Strait of Hormuz—combined with robust U.S. supply and weak Chinese demand—is weighing heavily on the oil market outlook. According to Bloomberg, Morgan Stanley analysts Martijn Rats and others, in their latest report, lowered their forecasts for the spot Brent crude benchmark’s average prices in Q3 and Q4 by $15 and $5 per barrel respectively, to $75 per barrel. They also revised downward their forecasts for all four quarters of next year, projecting that the benchmark price will fall to $70 per barrel by the end of 2027. The analysts wrote in the report: “As market focus shifts toward 2027, the situation has come full circle—back to oversupply.” Brent crude futures have fallen roughly 30% this quarter—the largest single-quarter decline since 2020. The immediate trigger was the interim ceasefire agreement between the U.S. and Iran, which led to the partial resumption of shipping through the Strait of Hormuz. This sharp price drop has prompted several institutions to reassess their forecasts; Goldman Sachs, for instance, has also lowered its Q4 Brent forecast to $80 per barrel. Faster-than-expected restoration of Hormuz traffic intensifies supply pressure Morgan Stanley identified the faster-than-anticipated reopening of the Strait of Hormuz as the core driver behind this round of forecast downgrades. According to the report, 35 oil and gas tankers transited the strait last Thursday—marking the first time since the conflict erupted in February that traffic has returned to the pre-conflict normal range of 30–40 vessels per day. Although two vessels were attacked last weekend, causing a brief slowdown in transit, traffic volumes have since rebounded, indicating that tanker operators remain willing to use the Strait of Hormuz—a key signal that the market is returning to normal.

JPMorgan says rising exports, weak demand push global oil market into surplus

1 day ago

JPMorgan reports the global oil market entered a surplus in September, widening to 1.4 million barrels per day in October due to recovering Middle Eastern exports and weaker global demand. Rising inventories signal excess supply as crude imports increase.

reuters

2026-09-17

JPMorgan Analysts Unsure How to Model Oil as Iran War Drags On

2026-09-22

Dimon Says US Shouldn't Punish India Over Russian Oil

2026-10-01

No Lights, No Radio: Getting Oil Through Hormuz Is a Risky Job

2026-10-13

JPMorgan Unleashes $1.5T Push for US Critical Minerals

2026-10-14

JPMorgan Adjusts Sustainable-Finance Strategy to Meet Historic Energy Demand