Global oil markets

Global oil prices
The Brent crude oil spot price averaged $63 per barrel (b) in December, $11/b lower than the average in December 2024. Crude oil prices fell—or were flat—in every month during the second half of 2025 (2H25). Growing crude oil production and increasing oil in floating storage outweighed the effect of potential disruptions to oil exports driven by tensions in Russia and Venezuela. We forecast that growing global oil production will continue to drive high global oil inventory builds through the forecast, causing crude oil prices to fall through 2026. However, inventory builds begin to gradually moderate next year, stemming price declines. We forecast that the Brent spot price will average $56/b in 2026 and $54/b in 2027, compared with an average of $69/b in 2025.

Strong global oil production growth outpaced consumption growth, driving our assessment that global oil inventories rose quickly in 2H25. We expect this trend to continue in both 2026 and 2027, although at a decreasing rate in 2027 as supply growth begins to slow and global oil demand growth increases to 1.3 million barrels per day (b/d) from 1.1 million b/d in 2026. We forecast that global oil inventory builds will average 2.8 million b/d in 2026, which is similar to this year’s increase, before averaging 2.1 million b/d in 2027.

There are signs increasing volumes of oil are accumulating in transit on the water or in floating storage, which have begun to weigh on oil prices. However, the excess supply that we estimate built up last year has not yet been fully reflected in observable inventories of crude oil such as those at storage hubs in Cushing, Oklahoma, or the U.S. Gulf Coast. We expect that lower near-term oil prices relative to those for oil deliveries further in the future (in other words, contango market structure) will encourage market participants to begin to store crude oil on land until supply and demand imbalances moderate and inventory builds decrease.

China’s continued strategic inventory builds provide a major source of support for crude oil prices going forward. We assess that a large portion of oil inventory builds during 2025 went into strategic stockpiles in China. Because these strategic builds acted as a source of demand, similar to the consumption of oil, they limited downward price movements often associated with large inventory accumulation. We assume that China will continue building strategic stockpiles at nearly the same rate of just under 1.0 million b/d in 2026 before decreasing its rate of strategic builds by nearly a third in 2027.

Although we forecast OPEC+ will produce almost 0.9 million b/d less on average than its current targeted production in 2026, we expect much of this shortfall to be driven by underproduction from members such as Russia and Mexico due to sanctions and declining productivity, respectively. Of the nine OPEC members subject to production targets (a group that excludes Iran, Libya, and Venezuela), we expect production will track closely with stated targets during 2026. On January 4, OPEC+ reaffirmed plans to keep production flat in the first quarter of 2026 (1Q26), but allowed for future adjustments, including plans to re-evaluate the maximum sustainable production capacity to be used in setting 2027 production targets when the group meets in 4Q26. Despite no plans to announce 2027 targets until 4Q26, we do not expect OPEC+ will increase production next year given our expectation of large inventory builds over the forecast period.

Lastly, evolving conditions in Venezuela remains a key uncertainty in our forecast. The oil blockade and the interception of sanctioned oil tankers near Venezuela halted most of Venezuela’s oil exports, resulting in production shut-ins. We estimate that about 0.6 million b/d of Venezuela’s oil exports are currently disrupted, and an equivalent amount of production has been shuttered. Most of these volumes likely would have been exported to China. Our forecast assumes that sanctions on Venezuela remain in place throughout the forecast. Any sanctions relaxation or other U.S. government policy changes related to Venezuela that could result in more oil production than we assumed in this forecast would put additional downward pressure on oil prices.

Global oil consumption and production

Although oil production continues to grow over the next two years, falling oil prices slow the rate of growth compared with 2025. Global liquid fuels production increased by an estimated 2.9 million b/d in 2025, and we expect it will grow by an average of 1.4 million b/d in 2026 and 0.5 million b/d in 2027. Global liquid fuels production growth in 2026 is driven by growth from OPEC+ and non-OPEC+ production, primarily from countries in South America. Global liquid fuels production growth comes almost entirely from non-OPEC+ countries in 2027 as OPEC+ targets are assumed to remain at 2026 levels and the group’s production levels are largely unchanged.

We forecast liquid fuels production in Brazil, Guyana, and Argentina increases by 0.6 million b/d in 2026, leading growth outside of OPEC+. Liquid fuels production from OPEC+ increases by 1.1 million b/d in 2026. This increase does not include Iran, Libya, or Venezuela, which are not subject to OPEC+ targets. Offsetting production growth from OPEC+ and Brazil, Guyana, and Argentina is the drop in Venezuela’s production this year. In 2027, liquid fuels production growth is driven almost entirely by the same three countries in South America, which collectively grow by 0.4 million b/d, accounting for about two-thirds of total global production growth. Forecast growth in South America from new project developments helps offset the decrease in crude oil production in the United States, which falls by 0.2 million b/d because of lower oil prices. OPEC+ liquid fuels production remains flat in 2027.

Global liquid fuels consumption increased by an estimated 1.2 million b/d in 2025 and is forecast to increase by 1.1 million b/d in 2026 and 1.3 million b/d in 2027. Consumption growth rises next year as global economic activity picks up pace. Based on forecasts from Oxford Economics, our forecast assumes global GDP will grow by 3.1% this year and 3.3% in 2027.

We forecast liquids fuels consumption will grow by 1.1 million b/d in non-OECD countries in 2026 and another 1.2 million b/d in 2027, making up nearly all of global liquid fuels consumption growth. Most non-OECD growth is concentrated in Asia. We expect liquid fuels consumption in India will increase by almost 0.3 million b/d in both 2026 and 2027. We forecast total liquid fuels consumption in China increases by just over 0.2 million b/d in both 2026 and in 2027.

The Middle East is also a significant source of non-OECD demand growth, with consumption increasing by 0.1 million b/d in 2026 and 0.2 million b/d in 2027. We forecast total liquid fuels consumption in Africa increases between 0.1 million b/d and 0.2 million b/d in both years of the forecast, led by strong growth in Sub-Saharan Africa.