Barclays has reduced its 2026 Brent crude forecast by $4, setting it at $66 per barrel. This adjustment reflects the expectation that OPEC+ will completely eliminate voluntary supply cuts by September 2026.
The bank observed a recent OPEC+ move to increase the October production target by 137,000 barrels per day. This is considered the initial step in reversing the 1.66 million barrels per day cuts implemented in May 2023, with a potential full rollback in a year.
Gradual Unwind Pace
Barclays noted that the gradual pace of this unwind is slower than anticipated. Despite the cautious increase, resilient spot fundamentals and a significant valuation gap continue to shape Barclays’ positive outlook on oil prices from early July.
The long-term outlook for Brent crude into 2026 is now tilting lower, with forecasts being revised down towards the mid-$60s. This is primarily because we expect OPEC+ to continue gradually adding supply back to the market over the next twelve months. The group’s plan to fully phase out the voluntary cuts initiated back in May 2023 points to a better-supplied market ahead.
However, in the immediate weeks, we see reasons for prices to remain firm. The recent decision to increase October’s output targets was quite modest, suggesting the pace of the supply unwind will be slower than many had feared. This cautious approach is providing support to the front end of the futures curve.
Current physical market fundamentals are strong, which helps explain this disconnect between the short and long-term view. For instance, last week’s EIA report showed a surprise U.S. crude inventory draw of 3.2 million barrels when a build was expected. We are also seeing China’s crude import data for August remain robust at over 11 million barrels per day, signaling healthy demand.
Compelling Market Structure
For traders, this creates a compelling market structure where near-term contracts are likely to outperform long-dated ones. We believe strategies that capitalize on this widening gap, such as calendar spreads, could be advantageous in the coming weeks. The current market tightness is keeping prompt prices elevated even as the 2026 outlook softens.
This measured approach from OPEC+ is not without precedent, as we saw a similar playbook during the 2021-2022 period. The group carefully managed the return of production then, which supported prices for an extended time. Their current gradualism suggests they want to avoid disrupting the market balance they worked to create.
