Entering 2026, oil analysts unanimously believe that the crude oil market will enter a period of severe oversupply, which may continue to depress prices throughout the year. In 2025, oil prices fell by about 20% as the supply glut expanded.
Instead, oil prices unexpectedly rose early in the year due to geopolitical shocks and stronger-than-expected demand. Goldman Sachs strategists wrote in a note to clients that prices are higher now than six months ago, leaving traders “focused on why the large global surplus … has not translated into sustained declines in Brent prices so far in 2026.”
But the two metrics don’t necessarily have to move at the same time, analysts told Yahoo Finance.
“My thought is, those two things… they can coexist,” Jorge León, head of geopolitical analysis at Rystad Energy, told Yahoo Finance.
Futures for Brent crude (BZ=F), the international pricing benchmark, have gained about 15% since the start of the year, while futures for U.S. benchmark West Texas Intermediate (WTI) crude (CL=F) are up a slightly smaller 14%.
As of January, the International Energy Agency estimated that the oil market was oversupplied by about 3.7 million barrels per day, which Macquarie analysts called an “extraordinary oversupply” in a recent client note.
OPEC+ spent much of 2025 easing production cuts. In the Americas, U.S. shale oil production remains at record levels and other exporters in the region are growing, while global demand for hydrocarbons is expected to fall broadly as the world turns to electrification and other forms of green energy.
But prices rose anyway as traders factored in various unexpected supply constraints and rising demand forecasts.
U.S. Treasury Department sanctions on Russia’s two largest oil producers Rosneft and Lukoil appear to have reduced oil production on the market by about 600,000 barrels per day, while exports from the CPC pipeline connecting the Caspian and Black Seas have also dropped by about 440,000 barrels per day, reaching the lowest level in at least seven years after drone attacks on export terminals on the Black Sea coast.
At the same time, the prospect of U.S. military action against Iran became increasingly clear, with possible disruption to the Strait of Hormuz, sending oil prices soaring. The Strait of Hormuz is an important global chokepoint, with approximately 20 million barrels of petroleum products passing through its waters every day. Attacks on commercial shipping in the Red Sea have rerouted oil tankers around Africa’s Cape of Good Hope, tightening markets for physical delivery and increasing the cost of shipping oil products between Europe and Asia.
