We are facing a deeply divided outlook for the oil market in 2026, with major agencies unable to agree on whether we will see balance or a significant surplus. This uncertainty is keeping Brent crude prices firm near $67.6 per barrel. For derivative traders, this clash of forecasts creates specific opportunities in the coming weeks.
The geopolitical situation remains a key support for prices, justifying a risk premium. Recent reports from early February show US-Iran talks have stalled, with the US Treasury expanding sanctions on entities believed to be moving Iranian oil. This tension, which has kept around 1.5 million barrels per day of Iranian supply under threat, is preventing prices from falling despite bearish forecasts.
Geopolitical Risk And Price Support
Supply chain shifts are also adding to the tightness, particularly as India continues to move away from Russian barrels. We saw Indian imports of Russian crude fall nearly 20% in the final quarter of 2025 due to payment issues, forcing them into the spot market for Middle Eastern and African grades. This scramble for alternative barrels is supporting prices in the short term.
However, the risk of an oversupply in the first half of this year is very real and should not be ignored. News this week that Kazakhstan’s Kashagan field is ramping up production ahead of schedule after January maintenance could add 400,000 barrels per day back to the market by March. This aligns with the IEA’s view of a potential glut of over 3 million barrels per day this half.
This type of disagreement between forecasting agencies is something we have seen before. Looking back to 2024, the IEA and OPEC had a demand growth forecast gap of over 1 million barrels per day, creating similar volatility. The latest US inflation data for January 2026 coming in slightly above expectations also adds a bearish demand risk, as it may delay expected interest rate cuts.
Given the expected oversupply in the near term followed by a potential deficit later in the year, we are seeing opportunities in calendar spreads.
Trading Ideas For The Curve
Traders should consider strategies that benefit from near-term price weakness or range-bound action, such as selling out-of-the-money calls for March and April contracts. Simultaneously, buying longer-dated calls for the third and fourth quarters could position for the anticipated second-half supply deficit.
