Oil Markets in 2026 and Beyond: Where Prices Are Heading and What the Experts Are Saying

Oil Markets in 2026 and Beyond: Where Prices Are Heading and What the Experts Are Saying

If you have been watching oil prices lately and feel like you cannot quite get a read on where things are going, you are not alone. Even the biggest names on Wall Street and Bay Street are divided. Some see crude grinding lower. Others are warning of triple-digit spikes. And right now, with geopolitical fires burning in the Middle East and OPEC+ playing a careful balancing act, the market is about as uncertain as it has been in years.

Here is a clear-eyed look at where oil stands today, what the data is showing, and what the major forecasters are actually saying heading into the back half of 2026 and beyond.

The Current Picture: A Market Awash in Supply

For most of the past year, the dominant story in oil has been oversupply. The International Energy Agency has estimated that global oil supply could exceed demand by nearly 4 million barrels per day in 2026, which by any measure is an enormous buffer. That kind of surplus does not disappear overnight, and it has been one of the main reasons why baseline price forecasts have been sitting in the $60 to $70 range for much of 2025 and early 2026.

OPEC+ responded to this by hitting what it called a "strategic pause" on production increases, keeping output quotas steady for the first quarter of 2026. Eight of its core producers, including Saudi Arabia, Russia, the UAE, Kuwait, and Iraq, collectively account for more than half of global supply. When they held back, Brent crude briefly climbed back close to $72 a barrel in late January 2026, its highest level since August. But the relief was short-lived. The underlying math of supply growing faster than demand kept pressure on prices.

Then, in March 2026, the market got a very different kind of shock.

The Hormuz Crisis: How a Geopolitical Event Changed the Calculus

The partial closure of the Strait of Hormuz in March 2026 removed roughly 20 percent of global oil supply from the market almost overnight. Brent crude broke above $100 per barrel, and Goldman Sachs, which had been sitting on a relatively bearish forecast, immediately revised its 2026 Brent average upward to $85 per barrel from $77. Their Q4 2026 base case is now $71, but with a warning that if the disruption stretches another two months, prices could reach $93 or higher.

For Canadian consumers, the impact was immediate and tangible. Gasoline prices across the country surged from roughly C$1.30 per litre in late February to around C$1.55 per litre by mid-March, wiping out the consumer savings that had come from the removal of the federal carbon tax. The Bank of Canada found itself in an uncomfortable spot: inflation pressure from energy costs rising at the same time as labour markets softened.

This is the kind of event that reminds everyone why oil price forecasting is so difficult. The fundamental supply-demand picture pointed one way, and then a single geopolitical flashpoint pointed the other.

What the Major Forecasters Are Actually Saying

It would be hard to find a more divided group of analysts than the ones covering oil right now. Here is a quick rundown of where the major voices stand.

J.P. Morgan has been one of the most consistently bearish voices. Before the Hormuz shock, the bank had Brent averaging around $60 per barrel for 2026, with WTI at $54. Their reasoning was straightforward: global oil supply was growing roughly three times faster than demand. Non-OPEC producers like the United States, Brazil, and Guyana were adding significant output, and demand growth was only running at about 0.9 million barrels per day. J.P. Morgan even flagged a tail risk scenario where oversupply pushes WTI into the $30s by 2027 if OPEC+ fails to respond effectively.

Goldman Sachs went through a few revisions over a short period. In May 2025, they were calling for sub-$60 Brent in 2026. By February 2026, they had lifted their Q4 estimate to $60 Brent and $56 WTI on the back of lower-than-expected OECD inventories. Then the Hormuz crisis arrived and they pushed the full-year average to $85. Longer term, Goldman still sees Brent gradually recovering to around $80 by late 2028 as the market tightens and investment flows return to balance things out.

The U.S. Energy Information Administration (EIA) has maintained a relatively steady forecast through all of this. Their short-term outlook as of late March 2026 sees Brent remaining above $95 per barrel in the very near term before falling below $80 in Q3 2026 and settling around $70 by year end. For 2027, the EIA forecasts an average of around $64 per barrel, reflecting continued inventory builds weighing on prices once the geopolitical premium fades.

A Reuters poll of 34 economists and analysts conducted in late 2025 had Brent averaging $61.27 per barrel for 2026, with WTI at $58.15. The range of forecasts was wide: DBS Bank was on the optimistic end at $68, citing the risk of a full OPEC+ production halt and new Russia sanctions, while ABN Amro and Capital Economics were the most bearish at $55.

Scotiabank noted in early March that Canada, as a net energy exporter, would likely see a modest economic benefit from higher oil prices, estimating roughly a 0.5% GDP boost in year two of a sustained price shock, along with a small uptick in inflation. That said, they cautioned that the Canadian dollar-oil correlation has been weaker recently, which limits the currency benefit that Canadians might otherwise expect.

The Long Game: Will Oil Demand Actually Peak This Decade?

Beyond the near-term noise, there is a much bigger debate playing out between institutions that have very different views on where oil demand goes over the next 20 years.

The IEA expects global oil demand to peak somewhere around 105 to 106 million barrels per day by 2029, after which it anticipates a gradual decline as electric vehicles, renewables, and efficiency improvements take hold. The agency attributes the slowdown in demand growth largely to China's economic transition away from heavy industry and faster-than-expected EV adoption in Europe and North America.

OPEC disagrees sharply. In its long-term outlook, OPEC projects demand reaching 113.3 million barrels per day by 2030 and continuing to grow all the way to nearly 119 million barrels per day by 2045. The organization points to India, the Middle East, and Africa as the engines of that growth, and it argues that the energy transition in developing economies will move far more slowly than Western policymakers expect.

Enverus Intelligence Research sits roughly in the middle, projecting demand around 108 million barrels per day by 2030. Goldman Sachs's long-term model also leans toward continued demand growth through at least 2040, which is one reason why the bank advocates for continued upstream investment to avoid a supply crunch later in the decade.

The bottom line is that no one really knows. The range between the most bearish long-term case and the most bullish one is enormous, and which path the world takes will depend on policy decisions, technology cost curves, and economic development patterns that are genuinely uncertain.

Three Scenarios Worth Planning Around

Rather than betting on a single price, most serious analysts recommend thinking in scenarios. Here is a practical way to frame it for business and investment planning purposes.

Base case (most likely): Once the Hormuz situation stabilizes, prices ease back toward the $70 to $80 range in the second half of 2026. Inventories build gradually through 2027, keeping a ceiling on prices. Brent oscillates in a broad $60 to $80 band for much of the next three to five years, with volatility driven by geopolitical events rather than structural tightness.

Bullish scenario: OPEC+ maintains discipline, the Middle East conflict persists or escalates, and EV/renewable adoption disappoints. In this world, supply tightens meaningfully, demand stays robust, and prices could sustain above $90 or even test the 2008 record highs in a severe shock scenario. Canadian energy producers and Alberta government revenues would benefit significantly.

Bearish scenario: The geopolitical premium fades quickly, non-OPEC supply keeps growing, and demand growth slows faster than expected as EVs gain ground in Asia. In this case, the J.P. Morgan tail risk scenario becomes more plausible, with prices potentially drifting toward $50 or below. This would be painful for producers but welcome news for businesses and consumers facing high input costs.

What This Means for Canadian Businesses and Investors

Canada occupies a unique position in all of this. As a major oil exporter, the country's fiscal health and the Canadian dollar tend to benefit when prices rise. Alberta's government revenues, energy sector employment, and Western Canadian Select prices all move with global benchmarks. But at the same time, Canadian consumers and energy-intensive businesses bear higher costs at the pump and on heating bills when crude prices spike, and the pass-through to broader inflation complicates the Bank of Canada's job.

For corporate decision-makers, the key takeaway is not to anchor capital budgets or energy cost assumptions to a single price forecast. The gap between the most bullish and most bearish credible scenarios for 2027 alone is more than $40 per barrel. That kind of range demands hedging strategies, scenario-based planning, and flexibility in energy procurement contracts.

For investors, the current environment favours diversified exposure to the energy sector through equities and broad commodity baskets rather than outright bets on futures. Companies with strong balance sheets, low break-even costs, and production in politically stable jurisdictions are better positioned to navigate this kind of uncertainty than highly leveraged operators who need $80 oil just to service their debt.

Final Thought

Oil markets have always been a combination of economics, geopolitics, and human behaviour, and 2026 is proving that more vividly than most years. The fundamental case for lower prices is real and well supported by the data. But so is the capacity for sudden, dramatic shocks that can flip the picture in a matter of weeks. Anyone telling you they know exactly where oil will trade in 2027 is either very confident or not paying close enough attention. The honest answer is that the range of outcomes is wide, and planning for that range is more valuable than chasing a single number.

This article is intended for general informational purposes. It does not constitute investment advice. Readers should consult a qualified financial advisor before making any investment or business decisions related to energy markets.