Dr. Gil Feiler
Oil markets enter a phase of moderate fundamentals with Brent expected to average ~$66–69 USD/barrel in H2 2025, gradually declining to around $58 USD in mid-2026. This forecast reflects a confluence of rising non‑OPEC+ supply, shifting demand dynamics—particularly in non‑OECD economies—and recurring geopolitical risk episodes. The short‑term upside remains tied to conflict‑driven disruptions, whereas structural oversupply is likely to cap prices in the medium term.
Market Fundamentals: Supply & Demand Dynamics
Three leading agencies—the EIA, IEA, and OPEC—converge toward global demand growth of 0.7–1.3 million barrels per day (mb/d) in 2025 and 2026, with key divergences in estimates of supply growth.
Demand: The IEA forecasts demand growth of around 700 kb/d in 2025 and again in 2026, led by emerging markets such as India and China  . OPEC maintains a more optimistic view, expecting 1.3 mb/d annual growth across both years, particularly in non‑OECD regions .
Supply: The EIA anticipates non‑OPEC+ supply and NGL growth of ~1.4–1.8 mb/d in 2025 and ~0.9 mb/d in 2026, while the IEA projects supply expansion of 1.3–1.5 mb/d annually as U.S. shale and projects in Brazil, Guyana, and Canada ramp up .
Together these assumptions point to a gradual shift toward a mild oversupply environment, especially as inventory builds resume later in 2025.
Price Forecast Trajectory
Near Term: Aug–Dec 2025
Output increases from OPEC+ (notably ~0.41 mb/d in August) and steady non‑OPEC growth are expected to create supply surplus, partially offset by regional geopolitical risks from the Middle East . The EIA forecasts Brent averaging ~$69 in 2025, with WTI near $65 bbl, reflecting upward revisions due to risk premiums, though inventory builds remain a downward force . Goldman Sachs, in its April 2025 update, forecasts Brent ~$63, WTI ~$59 for 2025, anticipating a mild surplus of ~0.8 mb/d, and deeper surplus of 1.4 mb/d in 2026 . Consensus analyst polls reinforce this with average price predictions for Brent near $67–68 and WTI around $64–65.
Mid to Long Term: 2026 (Jan–Jul)
Beyond year‑end, rising inventory levels and continued non‑OPEC production growth are expected to exert downward pressure. The EIA projects Brent to average ~$58 bbl in 2026 and WTI at around $55–56 bbl. Goldman Sachs’ outlook aligns, projecting Brent ~$58 and WTI ~$55 amid strong market imbalance and trade‑induced demand softness.
Risk Scenarios & Sensitivity Analysis
Upside risks: Iran’s threat to close the Strait of Hormuz in June 2025 hints at potential strikes that could disrupt ~20% of global crude flows, potentially forcing prices above $100 during acute volatility episodes
• Downside risks: A sharp deceleration of Chinese or U.S. demand due to trade wars or recession could weaken price support beyond the base forecast.
Inventory trends and spare capacity drive expected price compression. OECD inventories are likely to grow from 61 to 66 days of supply by end‑2026, supporting the bearish forecast
Large-scale new production capacity, particularly in the U.S. and Guyana, combined with slow OPEC+ easing of voluntary cuts (approx. 2.2 mb/d phased out Sept 2024 to mid‑2025), is set to tip the balance further . On the demand side, China’s oil import growth has slowed despite rapid renewables expansion and electric vehicle adoption, signaling structural demand weakening in transport fuels.
Conclusion
In summary, the academic consensus—anchored on reputable institutional forecasts—indicates:
Brent crude: expected to average USD 66–69 in late 2025, declining to ~USD 58 by mid‑2026.
WTI crude: likely averaging USD 63–65, sliding to USD 55–56.
These projections take account of oversupply trends, subdued demand forecast, and moderate geopolitical risk premiums. Short‑term volatility (e.g. ~$80–100) remains possible from conflict escalation, but absent severe disruptions, the prevailing trend favors gradual price compression driven by expanded supply and softening global demand fundamentals.
