Amid rising geopolitical risks and steadily growing global supply, crude oil is heading for its worst annual performance since the outbreak of the COVID-19 pandemic in 2020. Markets broadly expect that a serious oversupply will continue to weigh on oil prices in 2026. Investors are now laser-focused on the upcoming OPEC+ meeting this weekend and on President Trump’s policy stance, as persistently low oil prices are reshaping the global economic landscape.
At present, market attention is concentrated on three key factors: the OPEC+ meeting scheduled for this weekend, a bearish U.S. industry report, and President Trump’s policies toward major oil-producing countries such as Russia, Iran and Venezuela.
Throughout this year, the global oil market has been stuck in a state of oversupply. Both the International Energy Agency (IEA) and the U.S. government project that in 2025 global crude oil production will exceed consumption by more than 2 million barrels per day, and that this surplus will deteriorate further in the following year.
Earlier in 2025, OPEC+ abruptly shifted away from its long-standing price-support strategy and instead raised production to defend market share, a move that rattled markets. At the same time, countries such as Brazil and Guyana ramped up output, and U.S. production hit record highs. However, the producer group is now widely expected to shelve further output increases at this weekend’s talks.
On the positive side, falling oil prices help ease inflationary pressure and support central banks in their efforts to rein in price growth. The Federal Reserve has already cut rates three times in 2025, and minutes from its last meeting show that most policymakers believe further easing would be appropriate. On the flip side, low prices are squeezing the fiscal budgets of major oil-producing nations and energy companies. In addition, as U.S. shale fields pump out more light crude, output of associated gas liquids such as propane has surged, though this has had only a limited impact on crude benchmark pricing.
Geopolitics will remain a key driver of the market’s outlook for next year. The United States is pushing for an end to the Russia–Ukraine conflict, an outcome that could help gradually clear the backlog of Russian barrels currently stuck at sea. At the same time, Washington is seizing tankers carrying Venezuelan crude, forcing the South American producer to cut output in the near term.
Market Commentary:
On the weekly chart, crude oil continues to trade in a downward consolidation, with MACD lines and histogram contracting below the zero line. President Trump has stated that if Iran resumes rebuilding its nuclear program, he will strike the country again. Earlier in 2025, oil prices spiked sharply after he authorized attacks on Iran, but crude quickly gave back those gains as the end of the conflict became clearer, sending prices back into a downtrend.
