Weak start for global oil market expected in 2026: MARC Ratings

KUALA LUMPUR: The global crude oil market is expected to enter 2026 on a weaker footing, according to MARC Ratings.

Sustained high supply, subdued demand growth and ongoing global energy transition will continue to exert downward pressure on prices, it added.

Despite intermittent geopolitical developments, the rating agency said the fundamental imbalance between supply and demand will remain the dominant factor influencing price movements next year.

MARC forecasts Brent crude prices to average between US$60 and US$70 per barrel in 2026, marking a further moderation from its 2025 forecast levels of around US$68 to US$69 per barrel.

“Supply dynamics will remain a key determinant of oil price direction with OPEC+ is expected to gradually ease its voluntary production cuts.

“This will begin in May 2025 and be further relaxed in September 2025,” it said.

On the demand side, MARC said global consumption of oil is anticipated to remain sluggish, constrained by the structural shift towards renewable energy and improvements in energy efficiency.

Although the ongoing global monetary easing cycle, led by the US Federal Reserve and the European Central Bank, could stimulate industrial activity, its impact on oil demand is expected to be limited.

Overall, MARC said global oil demand growth is projected to reach 105.1 million barrels per day (mbpd) in 2026, expanding from the 104.0 mbpd in 2025, relatively sustaining the growth pace at 1.1 per cent.

The demand/supply ratio is projected to remain below parity in 2026, as production is expected to exceed consumption, consistent with the persistent oversupply trend.

“This marks a clear shift from the tight market conditions of 2022, when the ratio briefly surpassed 1.0 following the Russia–Ukraine conflict, triggering sharp price gains,” it said.

While geopolitical risks, particularly in the Middle East, will continue to drive short-term price volatility, MARC noted that recent developments point to a potential ceasefire in the region, which could help stabilise sentiment and reduce risk premiums.

It said market indicators also suggest a well-supplied environment in the near term, as the Brent futures curve is in backwardation between the fourth quarter (Q4) 2025 and Q1 2026, before transitioning into a gradual contango from mid-2026 as demand recovers and prices mean-revert.

“Taking into account the interplay of loosening Opec+ production management, robust non-Opec output, and muted demand recovery, MARC Ratings expects Brent crude prices to remain within the range of US$60–US$70 per barrel in 2026.

“Overall, the crude oil market in 2026 is expected to remain characterised by ample supply, cautious demand, and constrained price upside, reflecting the gradual transition of the global energy system,” it added.

© New Straits Times Press (M) Bhd

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