Goldman Sachs projects Brent crude prices to decrease to the low USD 50s by late 2026. This prediction is based on the global oil market shifting towards a surplus.
The forecast expects supply to surpass demand by an average of 1.8 million barrels per day from Q4 2025 to Q4 2026. This surplus is anticipated to increase global inventories by nearly 800 million barrels by the end of that time.
Major Global Oil Market Surplus
We see a major global oil market surplus developing, which is expected to begin in the fourth quarter of this year. This growing imbalance between supply and demand will likely push Brent crude prices down into the low $50 range by the end of 2026. Derivative traders should therefore begin positioning for a sustained period of price weakness over the next 18 months.
The supply situation is already looking heavy, lending credibility to this outlook. U.S. shale production has been robust all year, with July 2025 output figures exceeding 13.5 million barrels per day, a multi-year high. Additionally, we are observing that some OPEC+ members are beginning to exceed their production quotas, hinting at fraying discipline within the cartel.
On the other side of the ledger, demand signals are softening, particularly as recent manufacturing data from China has come in below expectations. This is already showing up in inventories, with the most recent weekly U.S. report showing a surprise inventory build of over 2 million barrels when a draw was expected. These early signs suggest storage is already starting to fill ahead of the projected surplus.
Developing Trends and Market Strategies
We have seen this scenario before, specifically when looking back at the oil price crash of 2014-2016 from our current perspective in 2025. A similar surge in non-OPEC supply then led to a massive inventory glut that kept prices depressed for an extended period. The forecast for an inventory build of nearly 800 million barrels by the end of 2026 suggests a similar, prolonged downturn could be ahead.
Given this view, traders should consider establishing bearish positions in the coming weeks using contracts that extend into 2026. Buying long-dated put options on Brent for mid-2026 expiries would provide downside exposure with a defined risk. Alternatively, selling call credit spreads could be a strategy to capitalize on both falling prices and time decay.
