Published by Global Banking & Finance Review®
Posted on February 27, 2026
3 min readLast updated: April 2, 2026
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Analysts nudged 2026 oil forecasts higher as U.S.-Iran tensions keep a $4-$10/bbl geopolitical risk premium embedded in prices, even while a sizeable surplus is expected later in the year. Brent is now seen averaging $63.85 in 2026 (WTI $60.38), but oversupply and OPEC+ output decisions could cap up
By Pablo Sinha and Kavya Balaraman
Feb 27 (Reuters) - Supply risks from ongoing geopolitical tensions have prompted analysts to raise their oil price forecasts for the year, despite concerns that an oversupply will continue to weigh on the market.
The survey of 34 economists and analysts conducted in February forecast that Brent crude would average $63.85 per barrel in 2026, up from January's forecast of $62.02.
U.S. crude is projected to average $60.38 per barrel, compared with January's estimate of $58.72. The benchmarks have averaged $70.48 and $65.01 respectively year-to-date.
"Oil prices are bloated with a decent geopolitical risk premium," said Norbert Rucker, head of economics & next generation research at Julius Baer.
"That said, Iran tensions should prove temporary and once the attention span exhausts, the focus should return on the supply glut and the lasting pressure on prices."
In February 2025, analysts expected Brent and WTI to average $74.63 and $70.66 in 2025, while prices averaged $68.19 and $64.73 respectively over the year.
GEOPOLITICAL RISK PREMIUM OF $4-$10/bbl
Concerns that a potential conflict between the U.S. and Iran could affect supplies have padded oil prices with a risk premium of $4/bbl to $10/bbl, analysts said. U.S. President Donald Trump briefly laid out his case for a possible attack in his State of the Union speech this week.
However, expectations of a market surplus are likely to be the main price driver in the later part of the year, according to analysts. Estimates of the surplus range anywhere from 0.8 million to 3.5 million barrels per day and will hinge in part on China's stockpiling efforts.
"A slowdown in China's strategic stockpiling would further increase the oversupply, as China has recently added around 1 million barrels per day to its reserves, effectively removing part of the surplus from the market," said Cyrus De La Rubia, chief economist at Hamburg Commercial Bank.
OPEC+ POLICY REMAINS IN FOCUS
Meanwhile, OPEC+ will likely consider increasing oil output by 137,000 barrels per day for April, three sources with knowledge of OPEC+ thinking told Reuters.
The increase would bring an end to a three-month pause in production increases, and comes as the group prepares for peak summer demand.
Eight OPEC+ producers are set to meet this Sunday.
"If the geopolitical risk premium remains in play by then, this may further embolden (OPEC) to resume output hikes," said Zain Vawda, analyst at MarketPulse by OANDA.
Many analysts expect U.S. oil production to either plateau or slightly decline in 2026. Meanwhile, most analysts see oil demand growing between a range of between 0.5 and 1.1 million barrels per day.
"High prices, an economic slowdown due to trade uncertainties and a higher adoption of EVs will add downward pressure to that growth," said Surabhi Menon, research analyst at the Economist Intelligence Unit.
(Reporting by Pablo Sinha and Kavya Balaraman. Editing by Jane Merriman)
They expect a market surplus to be the main driver later in the year, with estimates ranging from 0.8 million to 3.5 million barrels per day, depending partly on China’s stockpiling.
Analysts said a slowdown in China’s strategic stockpiling could increase oversupply; China has recently added around 1 million barrels per day to reserves, effectively removing part of the surplus from the market.
OPEC+ is expected to consider increasing output by 137,000 barrels per day for April, ending a three-month pause in production increases as the group prepares for peak summer demand.
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