Coming into 2026, the consensus view among oil analysts was that the crude market was entering a period of deep oversupply, likely to keep depressing prices throughout the year. In 2025, oil prices fell by roughly 20% as the glut widened.
Instead, oil prices have seen an unexpected rally through the start of the year on 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 Brent price decline in 2026 year-to-date,” Goldman Sachs strategists wrote in a note to clients.
But those two metrics don’t necessarily have to move together, analysts told Yahoo Finance.
“My thinking here is that those two things … they could live together,” Jorge León, the head of geopolitical analysis at Rystad Energy, told Yahoo Finance.
Futures on Brent crude (BZ=F), the international pricing benchmark, have gained roughly 15% since the start of the year, while those on US benchmark West Texas Intermediate (WTI) crude (CL=F) are up a slightly smaller 14%.
As of January, the International Energy Agency has estimated that the oil market would be oversupplied by roughly 3.7 million barrels per day (bpd), what Macquarie analysts called an “extraordinary oversupply” in a recent client note.
The Organization of the Petroleum Exporting Countries, or OPEC+, spent much of 2025 unwinding production cuts. In the Americas, US shale production has remained at record volumes alongside growth from other exporting nations in the region, while global demand for hydrocarbons was expected to broadly decline as the world turned toward electrification and other forms of green energy.
But prices have risen anyway as traders have priced in a variety of unexpected supply constraints and upticks in demand forecasts.
Sanctions from the US Treasury Department on Rosneft and Lukoil, two of Russia’s largest oil producers, appear to have taken roughly 600,000 bpd off the market, while exports from the CPC pipeline, which runs between the Caspian and Black seas, have dropped by roughly 440,000 bpd to the lowest level in at least seven years after drone strikes at the Black Sea-side exporting terminal.
At the same time, growing prospects of military action by the US against Iran have sent oil prices surging on the possibility of disruptions to the Strait of Hormuz, a critical global chokepoint that sees roughly 20 million bpd of petroleum products cross its waters. Attacks on commercial shipping in the Red Sea have rerouted tanker traffic around Africa’s Cape of Good Hope, tightening physical delivery markets and increasing freight costs for oil products moving between Europe and Asia.
