Commerzbank’s commodity team, led by Barbara Lambrecht, notes that Oil volatility has risen as markets watch US–Iran talks and updated forecasts from the IEA, EIA and OPEC. The bank expects near‑term support for Brent as winter storms and outages curb supply and boost demand, but still projects renewed oversupply and lower prices later in 2026 as OPEC+ output rises.

Short term support, longer term headwinds

"Volatility has also increased on the oil market. The main focus today is likely to be on the talks between Iran and the US. In the run-up to the talks, oil prices came under pressure because this fueled hopes of an easing of the conflict, which had previously threatened to escalate."

"At the start of the talks, Iran dampened expectations of a quick agreement. Should the situation become tense again, the price of a barrel of Brent crude oil could rise back to USD 70."

"Next week, the three energy agencies will present their new forecasts. In view of the cold weather, they are likely to revise their expectations for global oil demand upwards for the current year, while production expectations are likely to be adjusted downwards due to numerous outages."

"However, we fundamentally stand by our assessment that oversupply will cause prices to fall over the course of the year. After all, the production outages are only temporary and OPEC+ is likely to further increase production from April onwards."

"All in all, the oversupply in the oil market at the beginning of the year is likely to have been significantly lower than previously expected. The IEA had already downgraded its expectations regarding the supply surplus in the previous month. This should support prices for the time being."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)