Geopolitics Heats Up, But Oversupply Could Put the Brakes on Oil
Oil prices remained in the green today, with Brent around $63.00/barrel and WTI around $58.75/barrel in the European session. This small increase is still supported by a geopolitical risk premium, particularly from Iran.
However, despite the volatility in geopolitical headlines, Goldman Sachs analysts believe the broader outlook for 2026 remains uncertain: excess supply is expected to prevent a sustained oil rally and keep futures prices trending lower this year.
Goldman estimates that a global supply surplus could push oil to its lowest point in the fourth quarter of 2026, with Brent projected at $54/barrel and WTI at $50/barrel. Their focus is on the buildup of inventories, which is increasingly impacting prices.
The bank also highlighted policy factors: US policymakers' preference for a robust energy supply is seen as limiting the potential for sustained price increases, especially ahead of political dynamics such as the midterm elections. This means that any geopolitical spike risks being quickly dampened by the supply narrative.
For 2027, Goldman Sachs sees a moderate recovery as non-OPEC supply growth slows and demand remains solid. It projects an average price of Brent at $58 and WTI at $54 in 2027.
In conclusion: In the short term, geopolitics could cause oil to surge, but for this year's market trend, the oversupply theme remains overshadowed. Therefore, without a real supply disruption, the room for a rally is likely limited, and the market is likely to return to a range.
Source: Newsmaker.id
