Key Points
- UBS expects oil prices to remain low in 2026 due to a large global surplus.
- Brent crude is forecast to average $62 a barrel, with the surplus peaking in the first quarter.
- The surplus is expected to shrink throughout the year, which should help prices recover.
- Potential supply disruptions in Russia, Venezuela, or Iran are a major upside risk.
Oil prices are likely to stay under pressure in 2026 as a massive global surplus continues to weigh on the market. According to a new report from UBS, Brent crude is expected to average approximately $62 per barrel, with U.S. WTI at $58 per barrel. This is because the world is producing about 1.9 million more barrels of oil per day than it’s using, a glut that is very similar to what we saw in 2025.
The surplus is expected to be at its worst in the first quarter, which could push Brent prices down to around $60. After that, however, UBS sees the market starting to improve.
The key difference between the current period and previous periods of oversupply is that the surplus is expected to decline gradually throughout 2026. This should help prices stabilize and begin to recover as the year goes on.
There are also a couple of wild cards that could tighten the market much faster than expected. Any new supply disruptions in Russia, Venezuela, or Iran could quickly send prices into the mid-to-high 60s. On the other hand, if a new supply of approximately 1 million barrels per day from Russia and Venezuela enters the market, prices could fall to the mid-50s.
The upside for oil prices is also constrained by the fact that OPEC+ currently has about 4.1 million barrels per day of spare production capacity. If prices rise too much, they could quickly unwind their voluntary production cuts and flood the market with more oil.
Looking further ahead, UBS is more optimistic. They forecast Brent at $70 per barrel in 2027 and $75 in 2028, as supply growth from non-OPEC countries slows. Other analysts agree, with Bernstein seeing 2026 as the bottom of the cycle, with prices recovering to around $70 in 2027.
