Oil analysts say there’s a provide glut — why that hasn’t translated to decrease costs this 12 months
Coming into 2026, the consensus view amongst oil analysts was that the crude market was getting into a interval of deep oversupply, more likely to hold miserable costs all year long. In 2025, oil costs fell by roughly 20% because the glut widened.
As an alternative, oil costs have seen an sudden rally by the beginning of the 12 months on a mixture of geopolitical shocks and stronger-than-expected demand. Costs at the moment are larger than they have been six months in the past, leaving merchants “targeted on why a big world surplus … has not translated right into a sustained Brent worth decline in 2026 year-to-date,” Goldman Sachs strategists wrote in a observe to purchasers.
However these two metrics do not essentially have to maneuver collectively, analysts informed Yahoo Finance.
“My pondering right here is that these two issues … they may dwell collectively,” Jorge León, the top of geopolitical evaluation at Rystad Vitality, informed Yahoo Finance.
Futures on Brent crude (BZ=F), the worldwide pricing benchmark, have gained roughly 15% for the reason that begin of the 12 months, whereas these on US benchmark West Texas Intermediate (WTI) crude (CL=F) are up a barely smaller 14%.
As of January, the Worldwide Vitality Company has estimated that the oil market could be oversupplied by roughly 3.7 million barrels per day (bpd), what Macquarie analysts referred to as an “extraordinary oversupply” in a latest shopper observe.
The Group of the Petroleum Exporting International locations, or OPEC+, spent a lot of 2025 unwinding manufacturing cuts. Within the Americas, US shale manufacturing has remained at file volumes alongside progress from different exporting nations within the area, whereas world demand for hydrocarbons was anticipated to broadly decline because the world turned towards electrification and different types of inexperienced power.
However costs have risen anyway as merchants have priced in a wide range of sudden provide constraints and upticks in demand forecasts.
Sanctions from the US Treasury Division on Rosneft and Lukoil, two of Russia’s largest oil producers, seem to have taken roughly 600,000 bpd off the market, whereas exports from the CPC pipeline, which runs between the Caspian and Black seas, have dropped by roughly 440,000 bpd to the bottom stage in at the least seven years after drone strikes on the Black Sea-side exporting terminal.
On the similar time, rising prospects of army motion by the US in opposition to Iran have despatched oil costs surging on the potential for disruptions to the Strait of Hormuz, a important world chokepoint that sees roughly 20 million bpd of petroleum merchandise cross its waters. Assaults on business delivery within the Crimson Sea have rerouted tanker visitors round Africa’s Cape of Good Hope, tightening bodily supply markets and growing freight prices for oil merchandise transferring between Europe and Asia.
