Big Oil Prepares for Leaner Prices and Harder Choices in 2026

Core Insights - Several trends in the energy markets are expected to shape the global oil, gas, and energy equities markets into 2026, influenced by geopolitical factors and supply-demand dynamics [1][2] Supply-Demand Dynamics - The oil market is currently experiencing an oversupply, with the International Energy Agency (IEA) projecting a supply exceeding demand by up to 3.84 million barrels per day (bpd) in 2026 [3] - Analysts predict that the oil glut will be short-lived, with expectations of market balancing later in 2026 and into 2027 [4] - Goldman Sachs anticipates that lower oil prices may be necessary to rebalance the market after 2026, barring significant supply disruptions or OPEC production cuts [5] Supply Waves - Supply waves are expected to be the main driver of oil and natural gas prices in the coming years, with a notable surge in LNG exports projected to exceed 50% from 2025 to 2030 [4][5] - Rystad Energy forecasts a year of upstream energy abundance in 2026, although potential downstream bottlenecks may arise [6] Refining Margins - High refinery utilization rates and elevated product crack spreads are anticipated, particularly with very high diesel crack spreads in Europe and the U.S. expected to persist through most of 2026 [7]