Oil prices will go down but won't collapse
Global oil prices are likely to remain under pressure in 2026. Supply is expected to exceed demand by as much as 4 million barrels a day. The Energy Information Administration expects inventories to continue building through 2026, reinforcing downward pressure on prices.
TL;DR
- Global oil prices are expected to be under pressure in 2026 due to an anticipated supply exceeding demand by up to 4 million barrels a day.
- The Energy Information Administration (EIA) forecasts rising inventories through 2026, which will further suppress prices.
- West Texas Intermediate (WTI) is predicted to average around $51 a barrel in 2026, down from approximately $58 currently.
- Some analysts suggest prices could temporarily fall to $40 a barrel due to extreme oversupply.
- A drop to $40-$50 a barrel is expected to trigger capital spending reductions and production shut-ins by U.S. oil producers.
- The EIA forecasts a decline in U.S. oil output in 2026 as a consequence of lower prices.
- The marginal cost of producing shale oil in much of the U.S. is around $45 a barrel, meaning producers will cease operations at a loss.