A wide range of events, in addition to geopolitical factors, have dominated the oil market over the last week.
First, both the IEA, OPEC, and the EIA published their monthly reports last week.
For the first time since May, the IEA now expects a slightly smaller oil surplus in 2026, although at 3.8 million barrels per day it remains a record high. The IEA now expects both slightly lower supply and stronger demand in 2026.
OPEC maintained a very optimistic outlook, indicating a balanced market if OPEC+ keeps production at around 43 mb per day. The OPEC report supports our forecast that the cartel will not increase production in 2026 and that the first-quarter pause will be extended.
The EIA report revised US oil production slightly higher for this year to 13.61 million barrels per day (mb/d), but lowered the 2026 forecast to 13.53 mb/d. The assessment that US oil production has peaked is therefore repeated. The EIA also publishes price forecasts, projecting that Brent will average USD 55 in 2026. The EIA emphasised that OPEC+ production policy and Chinese stockpiling will limit the downside.
Third, the geopolitical premium increased again. The effective Ukrainian attacks on Russian energy infrastructure continued. Last week, another oil tanker was hit in the Black Sea, and a Russian oil drilling platform in the Caspian Sea was reportedly attacked. More Russian refineries have also been hit during the week.
As discussed above, there is a growing market consensus that a peace agreement in Ukraine is achievable. The United States reportedly offered Ukraine an Article 5-like security guarantee yesterday. However, significant territorial disagreements remain, and Trump continues to put heavy pressure on Ukraine to give up the entire Donbas to Russia, even though Russia does not control all of Donbas.
After speaking with European leaders yesterday, Trump said developments are moving in the right direction, while noting this has been said many times before. There were also more positive comments from Merz and the Ukrainian delegation. Zelensky, meanwhile, underscored what is already evident: that Ukraine and Russia remain far apart on territorial issues. Zelensky also pointed to security guarantees as a key issue.
The question is whether a peace agreement is already priced into the oil market. We do not believe this is entirely the case, and there may therefore be further downside risk for oil prices in the coming days, particularly if the psychologically important USD 60 level is broken.
That said, there are still no signs of peace on the battlefield. Ukraine, which has been on the defensive for some time, appears to be making progress. The city of Pokrovsk has been recaptured, and yesterday a key Russian submarine was hit by underwater drones.
The market is also increasingly focused on Venezuela after the US seized a tanker from Venezuela last week. Reuters reported Friday, based on several sources, that the United States is ready to seize more oil tankers to put financial pressure on Maduro. An additional six oil tankers were recently sanctioned.
It is difficult to interpret the US seizure and possible plans of more seizures as anything other than an escalation in the relationship with Venezuela. According to Trump, there are also “other things happening”. The vessel seized last week is the 20-year-old VLCC (Very Large Crude Carrier) The Skipper, which sailed under the name Adisa in 2022 after being sanctioned by the United States for transporting Iranian oil. A VLCC can carry up to 2 million barrels of crude. The tanker was reportedly heading for Cuba.
