Wall Street Analysts Predict Sustained Oil Oversupply Through 2026

A Reuters monthly survey of 35 analysts and economists has revealed growing pessimism regarding oil price trajectories, with projections for both West Texas Intermediate and Brent crude declining below previous forecasts. The findings underscore mounting concerns about persistent oversupply conditions that are expected to define market dynamics throughout 2026.

The latest polling data indicates WTI crude is forecast to average 59 dollars per barrel in 2026, representing a decline from the 60.23 dollars projected in the previous month’s survey. Brent crude, the international benchmark, is expected to average 62.23 dollars per barrel next year, down from October’s forecast of 63.15 dollars. The downward revisions reflect intensifying bearish sentiment driven by anticipated production increases from both OPEC Plus and non-OPEC Plus producers.

Industry executives have expressed concern about the implications of sustained low prices for shale production growth. Ryan Lance, chairman and chief executive of ConocoPhillips, suggested that at WTI prices ranging between 60 and 65 dollars per barrel, United States production would likely plateau. Lance warned that prices sustained at 60 dollars or lower could result in stagnation or modest declines in domestic output.

Investment bank Goldman Sachs has adopted an even more bearish stance, projecting WTI crude to average 53 dollars per barrel in 2026 amid substantial market surpluses. Daan Struyven, co-head of global commodities research at Goldman Sachs, characterised 2026 as witnessing “the last big oil supply wave the market has to work through” before rebalancing occurs in 2027.

The majority of analysts cited expanding supply from multiple sources as the primary bearish factor for price outlooks. However, respondents acknowledged that lingering geopolitical risks could provide a floor beneath prices, preventing more dramatic declines despite oversupply conditions.

At current price levels, shale producers are focusing on efficiency improvements and capital allocation optimisation rather than aggressive production expansion. The industry appears to be adopting a more disciplined approach, seeking to maximise returns from existing operations rather than pursuing growth at potentially unprofitable price points.

Goldman Sachs projects that longer-term supply growth will predominantly originate from OPEC members, which retain spare capacity and continue investing in capacity expansion projects. The bank suggests that modest growth from United States shale operations would require Brent crude prices approaching 80 dollars per barrel towards the end of the decade, significantly above current levels and near-term forecasts.

The outlook reflects a market adjusting to structural shifts in supply dynamics, with traditional spare capacity holders positioned to capture a larger share of incremental demand growth. The anticipated 2026 supply wave represents a critical juncture, after which market fundamentals may begin to tighten as production growth moderates and demand patterns stabilise.

The downward price trajectory has significant implications for capital expenditure decisions across the sector. Producers are likely to maintain conservative investment strategies until greater price stability emerges, potentially constraining future supply growth and setting the stage for the anticipated rebalancing in subsequent years.