Investment Rating - The report upgrades the Brent crude oil price forecast for the remainder of 2025 to $66 per barrel, with expectations of further price increases due to rising price premiums and shifting market risk concerns towards supply disruptions [1][2]. Core Insights - The cautious outlook for oil prices in 2026 is based on anticipated oversupply of approximately 1.7 million barrels per day due to the ramp-up of non-OPEC projects and the development of U.S. shale oil [1][2]. - The refining industry is currently in an upward cycle, driven by supply factors, with a projected net increase in global refining capacity of only 0.2 million barrels per day in 2025 and 0.4 million barrels per day in 2026 [8]. Summary by Sections Oil Price Forecast - The Brent crude oil price is expected to rise to $66 per barrel for the remainder of 2025, supported by low global inventory levels, particularly in OECD countries, and concerns over supply disruptions [2][3]. - A cautious forecast for 2026 predicts a decline to around $50 per barrel due to oversupply from non-OPEC projects [1][2]. Refining Industry Dynamics - The refining sector is experiencing high profit margins, particularly in diesel, driven by low inventory levels and the permanent closure of several refineries [7][8]. - The global refining system is under pressure due to a tight supply-demand balance, with significant growth expected in the demand for middle distillates like diesel and jet fuel [8]. Geopolitical and Supply Risks - Current market risks include supply disruptions and geopolitical instability, with a recommendation for conservative yet flexible trading strategies, such as purchasing call options and utilizing spot and forward contracts for hedging [5][6]. - The impact of Iranian oil production on market prices is significant, with potential price spikes if production increases dramatically [6]. OPEC and Non-OPEC Supply - The report highlights the uncertainty surrounding OPEC's spare capacity, which supports forward oil prices, and the potential for oversupply if new projects come online as planned [3][4]. - The refining industry is expected to benefit from the complexities of companies like Reliance Industries, which can leverage OPEC supply increases while also growing in other sectors [8].