OPEC+: From Supporting Prices to Gaining Market Share

The Organization of the Petroleum Exporting Countries and its allies (OPEC+), made a major policy change in 2025, moving away from defending oil prices toward protecting market share, reintroducing supply at a far faster pace than originally planned.

Under the initial plan, OPEC+ was expected to return 2.2 million barrels per day (bpd) of supply over an 18-month period. Instead, the alliance brought this volume back to the market within just six months. It then went a step further by beginning to unwind a second tranche of 1.65 million bpd of voluntary production cuts. While further increases are set to be paused through the first quarter of next year, OPEC+ has already restored around 411,000 bpd from this second tranche.

Given expectations of a surplus oil market in 2026, it appears unlikely that the remaining 1.24 million bpd from this tranche will be reintroduced next year. That said, the group’s next steps will hinge in part on what Russian and US supply would be.

Crude Under Pressure Amid Supply Surpluses

2025 draws to a close and crude markets find themselves in a cautious position. WTI crude has had a challenging year, falling more than 20% year-to-date and currently trading around $55 a barrel. The downturn has been driven largely by a sharp increase in global supply, as production surged following output hikes from OPEC+, alongside continued growth in the United States and other key producers. Expectations of a supply surplus have been building, particularly toward the end of this year and into 2026, exerting downward pressure on prices. Looking ahead to 2026, investors are trying to assess how much the surplus would be and how far the weakness in crude prices could extend.

OPEC and IEA at Odds on 2026 Oil Demand and Supply Forecasts

Supply growth has been a defining theme of the past few years. Non-OPEC producers, particularly in the United States, Brazil, Canada and Argentina, ramped up output in 2025. Yet, that pace is likely to slow in 2026. OPEC anticipates that this moderation will be enough to keep the global balance relatively tight when paired with solid consumption growth. While the International Energy Agency (IEA) points to broader supply additions that still outstrip demand gains, even as sanctions curb exports from Russia and Venezuela and shale costs temper U.S. growth.

This is the most notable divergence in outlooks from the agencies. In its latest assessments OPEC indicated that global oil demand will rise in 2026, supported by resilient economic growth in key regions such as Asia, the Middle East and Latin America, suggesting the oil market could be balanced.

By contrast, the IEA’s December outlook presents a more cautious view. The agency has raised its demand growth forecasts for both this year and next, citing a brighter macroeconomic backdrop and easing tariff concerns that support consumption.

While the agency revised down its forecast for next year’s global oil supply surplus for the first time since May, global oil supply is now expected to exceed demand by 3.84 million barrels per day in 2026, down from a surplus of 4.09 million bpd projected in November, still keeping the market in supply glut.

We are of the view that surplus in the oil market will grow in 2026, following OPEC+’s decision to unwind supply cuts at a quicker-than-expected pace, and we expect to see a surplus of more than 2million bpd in 2026.

US Crude Supply Likely to Ease in 2026

US oil production has remained resilient in 2025, despite sustained weakness in WTI prices and a notable slowdown in drilling activity. According to Baker Hughes, the US oil rig count has fallen by more than 15% year-to-date, dropping to its lowest level since September 2021, when the industry was still emerging from the impact of the Covid downturn.

Even so, US crude output has continued to set new records, surpassing 13.8 million bpd in September 2025. Production is on track to average around 13.6 million bpd this year, representing year-on-year growth of approximately 360,000 bpd.

Looking ahead; however, the outlook in 2026 appears less supportive. With prices likely to remain under pressure, we expect US crude production to start softening in 2026. Our base case assumes sustained WTI prices below $60 per barrel, which will increase the risk of more pronounced output declines. Shale producers require an average oil price of around $65 per barrel to profitably drill a new well, highlighting the growing tension between prices and future supply growth.

Source: TradingView. WTI daily price chart as of 18 December 2025.

2026 Oil Outlook: Looming Glut Points to Lower Prices

The higher oil output and the looming glut is creating persistent downward pressure on crude prices, which is likely to extend over the coming months. A break below key support of $55.12 appears increasingly likely, suggesting that WTI crude could decline to around $50 per barrel in the first quarter of 2026, before stabilising around that level for the remainder of the year. While near-term price weakness is likely, the downside appears increasingly contained. OPEC+ production policy discipline and China’s ongoing strategic and commercial inventory accumulation should act as stabilising forces, limiting the extent of further price declines.

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