In 2026, the consensus view among oil analysts was that the crude oil market was entering a period of deep oversupply, likely to keep prices depressed throughout the year. In 2025, oil prices fell by about 20% as the glut widened.
Instead, oil prices saw an unexpected rise to the start of the year, thanks to a combination of geopolitical shocks and stronger-than-expected demand. Prices are now higher than they were six months ago, leaving traders “focused on why a large global surplus … has not translated into a sustained decline in Brent in 2026 so far,” Goldman Sachs strategists wrote in a note to clients.
But those two values don’t necessarily have to move together, analysts told Yahoo Finance.
“My thinking here is that those two things … could live together,” Jorge León, head of geopolitical analysis at Rystad Energy, told Yahoo Finance.
Brent crude futures (BZ=F), the international crude oil benchmark, have gained about 15% since the start of the year, while US West Texas Intermediate (WTI) crude futures (CL=F) have risen slightly less by 14%.
As of January, the International Energy Agency estimated the oil market would be oversupplied by about 3.7 million barrels per day (bpd), which Macquarie analysts called an “extraordinary oversupply” in a recent client note.
The Organization of the Petroleum Exporting Countries, or OPEC+, has spent much of 2025 eliminating production cuts. In the Americas, U.S. shale production remained at record volumes alongside growth in other exporting countries in the region, while global hydrocarbon demand was expected to fall as the world moved to electrification and other forms of green energy.
But prices rose anyway as traders priced in a variety of unexpected supply constraints and increases in demand forecasts.
U.S. Treasury Department sanctions against Rosneft and Lukoil, two of Russia’s biggest oil producers, appear to have knocked about 600,000 bpd off the market, while exports from the CPC pipeline, which runs between the Caspian and Black Seas, fell by about 440,000 bpd, the lowest drone level in at least seven years. export terminal.
At the same time, the growing prospect of US military action against Iran has sent oil prices soaring over the possibility of a disruption in the Strait of Hormuz, a critical global bottleneck that sees more than 20 million barrels a day of oil products pass through its waters. Attacks on commercial shipping in the Red Sea have diverted tanker traffic around Africa’s Cape of Good Hope, tightening physical delivery markets and increasing shipping costs for oil products moving between Europe and Asia.