New Delhi: Global oil markets have entered a bearish phase, with Brent crude slipping to $65 a barrel on October 5 — a sharp correction from last week’s $70 high. The fall followed OPEC’s decision to raise output, which analysts say has shifted global oil balances from tightness to surplus.
Rystad Energy, in its latest oil market update, said that prices are likely to remain under pressure through 2026 unless OPEC+ alters its strategy or sanctions on Russia and Iran significantly reduce their exports.
What has triggered the fall in prices?
According to Rystad Energy, the oil market has undergone a fundamental shift. “The market has flipped from tight to tepid, with further production increases from OPEC+ testing price support,” said Susan Bell, Senior Vice President, Commodity Markets – Oil at Rystad Energy.
She added that the supply side is expanding while demand is weakening, setting up what she called “a one-two punch for crude prices” for the rest of 2025.
OPEC+ has been gradually unwinding the production cuts it implemented during the 2020–2024 period. This rollback, Rystad said, is set to add about 2.5 million barrels per day (bpd) of new supply in the second half of 2025. At the same time, non-OPEC+ countries such as the US, Guyana, Argentina and Canada continue to post incremental gains.
How have oil balances shifted?
The oil market, which was almost balanced in the third quarter of 2025, has now moved decisively into surplus.
Rystad expects global liquids balances to show a surplus of around 2.2 million bpd in the fourth quarter of 2025, with crude oil supply alone exceeding demand by over 2.5 million bpd.
OPEC+ output is projected to rise by 1 million bpd quarter-on-quarter in the last three months of 2025, while US production is forecast to add another 120,000 bpd despite signs of shale plateauing. On the demand side, consumption is expected to drop by 230,000 bpd, mainly due to weaker seasonal fuel use in OECD economies.
“The implications extend well beyond the remainder of this year, with 2026 set to inherit both higher stock levels and looser fundamentals, placing sustained pressure on crude prices,” Bell said.
What lies ahead for 2026?
Looking ahead, Rystad expects annual liquids supply growth of around 2.5 million bpd in 2026, led by returning OPEC+ barrels and steady expansion from Brazil, Canada and Guyana.
Global demand growth, however, is expected to stay below 1 million bpd, reflecting slow macroeconomic momentum and a plateauing in post-pandemic air travel recovery. This could leave the market with an oversupply of more than 2 million bpd for the year, concentrated in the first half.
Rystad warned that if inventories continue to build, Brent prices could fall below $50 a barrel.
What about WTI and the US market?
Rystad’s analysis also points to pressure on WTI crude, which may face added headwinds from resilient domestic production and potential inventory builds at Cushing, Oklahoma.
However, WTI’s discount to Brent may narrow slightly due to the commissioning of Canada’s Trans Mountain pipeline in 2024. The project redirected about 0.5 million bpd of Canadian exports away from the US, tightening supplies in the midcontinent and offering limited support to domestic prices.
What does it mean for global oil dynamics?
The surplus marks a clear end to the tight oil phase that began in mid-2024. With inventories building, Rystad says the market is now less vulnerable to disruption risks.
In its summary, the firm noted: “Supply is only moving in one direction, and with demand weakening, the remainder of 2025 will be a one-two punch for crude prices.”
Unless production cuts are reinstated or geopolitical supply shocks emerge, Brent crude may continue to hover near the $60 mark — with risks of a slide toward $50 in early 2026.
