The 2026 Oil Market — Supply Shock, OPEC+ Policy and the Path of Brent

A year defined by a supply shock

Brent began 2026 at around $61/bbl ^[1]. The EIA estimates the market was in surplus by 1.89 mb/d in 2025 ^[5], and OPEC+ had paused its planned output increases for the first quarter of 2026 ^[8]. That changed on 28 February, when military action in the Middle East led to the de facto closure of the Strait of Hormuz ^[1]. In 2025 the strait carried about 20 mb/d of oil, roughly a quarter of world seaborne oil trade ^[2].

Brent passed $100/bbl on 12 March and ended the first quarter at about $118/bbl. The EIA described the quarterly rise as the largest on an inflation-adjusted basis in data going back to 1988 ^[1]. Iraq, Saudi Arabia and the UAE shut in production, and attacks on energy infrastructure added to the pressure ^[1].

Supply has partially recovered since then. Global supply rose by 2.5 mb/d month on month to 102.3 mb/d in September, driven by Gulf producers ^[3]. Gulf crude exports reached 13.9 mb/d in September, which the IEA put at over 75% of pre-war levels ^[3]. However, the agency describes the recovery as fragile because of renewed attacks in the Gulf ^[3].

Forecasters disagree on demand but agree on a deficit

The three main agencies differ sharply on 2026 demand.

• IEA (14 October): demand falls by 2.6 mb/d to 102.4 mb/d, with diesel accounting for a quarter of the decline. A 2 mb/d recovery in 2027 would still leave demand 620 kb/d below 2025. Supply is forecast at 100.7 mb/d in 2026, down 5.8 mb/d, before rising by 7.7 mb/d in 2027 ^[3].
• EIA (6 October): consumption of 102.43 mb/d in 2026 against 104.40 mb/d in 2025, and production of 101.09 mb/d. That implies a 2026 shortfall of 1.34 mb/d, narrower than the 1.97 mb/d in its September forecast. The quarterly deficit peaked at 3.55 mb/d in the second quarter and is forecast to narrow to 0.69 mb/d in the fourth. The EIA then expects a 4.91 mb/d surplus in 2027 ^[4,5].
• OPEC (13 October): demand still grows by 0.2 mb/d in 2026, to 105.7 mb/d, cut from 0.4 mb/d previously. Growth is then forecast to rebound by about 2.55 mb/d in 2027, partly reflecting "the need to replenish oil inventories at large" ^[6,7].

The forecasts use different baselines, so the absolute demand levels are not directly comparable. The direction matters more. The IEA and EIA both see 2026 consumption below 2025, while OPEC sees marginal growth. All three expect a sizeable rebound in supply or demand in 2027.

OPEC+: quotas restored, barrels constrained

OPEC+ policy in 2026 has been shaped more by logistics than by quotas.

• First quarter: In late 2025 the eight countries with voluntary cuts reaffirmed a pause in increases for the first quarter of 2026 ^[8].
• 1 March: One day after the war began, the eight resumed unwinding the 1.65 mb/d of voluntary cuts announced in April 2023, starting with a 206 kb/d increase for April. Their statement cited "low oil inventories" ^[9].
• 5 April: The group agreed another 206 kb/d for May. It warned that "restoring damaged energy assets to full capacity is both costly and takes a long time". Al Jazeera, reporting with Reuters, called the increase "largely symbolic" while Hormuz remained blocked ^[10].
• 28 April: The UAE announced it would leave OPEC and OPEC+ with effect from 1 May, ending 59 years of membership. Its pre-war output was about 3.4 mb/d ^[11].
• 2 August: The remaining seven countries agreed a 188 kb/d increase for September. It was their sixth consecutive monthly rise and completed the restoration of the 1.65 mb/d layer. About 2 mb/d of cuts dating from 2022 remain in place until the end of 2026 ^[12].
• 4 October: The seven left November targets unchanged. Reuters reported that further changes were unlikely before 2027, as the war had delayed the capacity review that will set 2027 quotas ^[13].

Actual output tells a different story from the quotas. The seven core members pumped about 25 mb/d in August, roughly 5 mb/d below pre-war February levels, according to OPEC data cited by Reuters ^[13]. The IEA reported that OPEC+ supply rose by 2.1 mb/d in September, led by Saudi Arabia ^[3]. OPEC's own figures put production by the wider group of Declaration of Cooperation countries at about 39.07 mb/d in September, up 0.9 mb/d on the month ^[6].

Non-OPEC+ supply: the Americas carry growth

Outside OPEC+, supply growth is concentrated in the Americas. In September the IEA said the group it calls the "Americas Quintet" dominates non-OPEC+ growth, adding 1.4 mb/d in 2026 and 1 mb/d in 2027 ^[14]. OPEC's estimate of non-DoC liquids growth is lower, at about 0.6 mb/d in both years ^[6].

• United States: the EIA forecasts crude production of 13.9 mb/d in 2026 and 14.3 mb/d in 2027 ^[4].
• Brazil: Petrobras reported record second-quarter oil and gas production of 3.34 million boe/d. Its P-79 FPSO reached first oil in May ^[15].
• Guyana: before the war, the EIA expected the Uaru project to start in 2026, adding about 250 kb/d ^[16].

The UAE's exit also changes the accounting. The IEA said the UAE drove non-OPEC+ supply increases in September ^[3].

Brent's path in 2026

Brent's trajectory has followed the conflict closely.

• Pre-war: Brent closed at $72.48/bbl the day before the war began ^[17].
• Peak: Brent futures reached a four-year high of $126.41/bbl on 30 April ^[17].
• Truce: After a US–Iran memorandum was signed on 17 June ^[20], Brent fell to $72/bbl on 1 July, its lowest since 26 February ^[18].
• Renewed strikes: After 7 July, Brent traded between $79/bbl and $98/bbl from 23 July to 8 September. Futures reached $109/bbl on 15 September, and spot prices reached $132/bbl around the same time. Prices averaged about $104/bbl in the last two weeks of September ^[18].
• October: Brent settled at $116.72/bbl on 23 October, its highest close since 29 April, after Houthi attacks on Saudi energy infrastructure ^[19].

The gap between physical and paper prices is notable. In mid-October the IEA reported North Sea Dated at around $134/bbl, while Brent futures were around $107/bbl ^[3].

What the forecasts imply for 2027

The EIA expects Middle East shut-ins to average 4.5 mb/d in the fourth quarter. It expects most regional production to return to pre-conflict levels by the end of the second quarter of 2027, helped by a UAE bypass pipeline due online that year ^[5]. On that basis it forecasts Brent at $84/b in 2027 ^[4], easing to $87/b by the second quarter and $74/b in the fourth ^[5]. The IEA's projected 7.7 mb/d supply rebound in 2027 points in the same direction ^[3].

Both outlooks depend on Gulf exports recovering, and the EIA itself expects "continued volatility in crude oil flows" ^[5]. OPEC+ policy for 2027, depleted inventories and the pace at which stocks are rebuilt will determine how quickly the market moves from deficit to surplus.

Alupetra follows these market developments from its offices in Istanbul, London and Dubai.