Brent Holds the Low $60s as Risk Headlines Clash With a Bearish 2026 Outlook

Oil Ends 2025 in a Narrow Range as Markets Eye Risks and a Humble 2026 Outlook

Oil markets closed 2025 largely unchanged after a turbulent year, trading in a tight band as traders weigh a mix of geopolitical headlines, oversupply pressures and the prospect of a more balanced supply outlook in 2026. WTI hovered near the high $50s to around $58.50 a barrel, while Brent stayed near the low-to-mid $60s, roughly $62 a barrel at week’s end. Daily shifts were modest, with intraday moves around 1% in both directions as liquidity thinned into year-end. Regional benchmarks reflected the same price gravity, with Louisiana Light trading in the low $60s and other crude grades following Brent’s path.

breaking Week: A Quiet Final Squeeze for 2025

In the last full week of the year, both Brent and WTI posted about a 3% weekly gain, marking their strongest weekly performance since October. Brent touched the low $60s before settling near $62.40, and WTI edged toward $58.50. Yet the rally stopped short of turning momentum into a sustained breakout, as traders remained keenly aware that prices are still faced with a broader oversupply narrative and a market structure that favors range trading rather than a new rally.

Geopolitics Still Wield Sway: Quarantines and Conflicts

The latest risk premium is driven more by headlines than by demand surprises. Washington launched a two-month quarantine on Venezuelan crude, tightening enforcement against sanctioned vessels after several shipments slipped thru as December. This shift helps lift Brent back toward the low-$60s and nudges WTI back toward the $58-$59 zone, particularly when trading liquidity thins. Concurrently, Nigerian operations against Islamic State militants add a fresh layer of regional risk, underscoring how producer-wires and military actions can influence futures positioning even when direct supply routes seem unaffected.

Oversupply Realities Anchor the 2026 Picture

Despite buoyant headlines, the structural outlook remains anchored in ample supply. The primary U.S. energy outlook for 2026 projects Brent around $55 a barrel on average and WTI near $51, with global stock builds exceeding two million barrels per day.Even if OPEC+ under-delivers relative to targets by roughly 1.3 million barrels per day,inventories are still expected to rise. Major market participants are clustering around mid-$50s for Brent and low-$50s for WTI for next year unless a major supply shock or deeper coordinated cuts materializes. In plain terms: current spot levels sit above the medium-term equilibrium, signaling a mid-cycle regime rather than a tight market.

2025 Scorecard: A Bearish Year, But With Fightback

For the year, Brent has fallen about 17% versus late-2024 close values, while WTI is down around 19%. The drop underscores a market dominated by oversupply and rising non-OPEC output, punctuated by news-driven rallies that failed to sustain a lasting upside. Every push into the low-to-mid $60s in Brent has been greeted by sellers who expect the curve to realign with fundamentals and inventories.

Regional Benchmarks Show a global Palette

Regional grade pricing reinforces the global balance story. Louisiana Light trades near $60.90 per barrel, signaling a premium but not a crisis. Mars US hovers around $70, underscoring regional dynamics in sour crudes. The OPEC basket sits near $61.20, while Bonny Light trades higher at about $78.60 due to quality and local demand. Taken together,these spreads point to a market pleasant with a wide range of supply options rather than a sudden shortage.

Natural Gas: A Different Dynamic in the Energy Complex

Natural gas sits at roughly $4.34 per MMBtu, up more than 2% on the day in certain snapshots. Winter draws are expected to be ample, with forecasts pointing to weekly declines of about 158 Bcf and inventories around 3,420 Bcf-below last year and the five-year average. The price trajectory for gas remains tighter and more volatile than crude, driven by power demand, data centers and LNG exports. The official outlook for 2026 still sees gas averaging above $4 per MMBtu in the winter, easing to around $4.01 in 2026, while oil faces a different, slower adjustment path.

Sanctions, Shipping and Structural Risk premium

In 2025, sanctions and shipping friction became a persistent factor in oil pricing. The Venezuelan quarantine is a notable example, with ongoing compliance risk in a shadowy cargo network that keeps market players alert. The premium attached to these risks remains modest-measured in a few dollars per barrel rather than double-digit spikes-but it adds a new layer of cost and complexity to global flows, shaping how traders price risk into forward curves.

Russia-Ukraine: Peace Talks as Optionality,Not a Trigger

Peace-talk noise around Russia and Ukraine sits in the background of the Brent curve. The market treats any credible framework that eases sanctions on Russian crude as a downside risk, not an immediate catalyst. Until such a framework gains traction and credible enforcement appears,the upside for Brent remains capped by the balance of supply and geopolitics rather than a demand-driven surge.

China’s Exports and Refining Quotas: A Cap on margins

Asia’s refining policy continues to cap upside. China’s 2026 refined product export quotas total about 19 million tons for gasoline, diesel and jet fuel, plus roughly 8 million tons for low-sulfur marine fuel. Through the first 11 months of 2025, exports stood at around 52.65 million tons,down about 3.2% year-on-year. This capacity to push products into regional markets caps refining margins and, by extension, limits how high crude prices can rise without a demand-led surge.

Inventory Build Narrative

Globally, stock builds are projected to exceed 2 million barrels per day in 2026, a scenario that supports a gradual retreat in prices toward forecast averages. A lack of a dramatic contango signal means traders are less inclined to store aggressively unless spreads justify it, reinforcing a mid-cycle dynamic rather than a dramatic shift toward scarcity.

Energy Stocks Versus Oil: A growing Divergence

While crude has faced a double-digit decline in 2025, energy equities have shown resilience. Investors now emphasize cash returns, disciplined capital allocation and buybacks, which has allowed many integrated majors and high-quality explorers to hold up despite weaker crude. In a $55 Brent and $51 WTI environment, disciplined operators continue to deliver free cash flow even as the oil market remains oversupplied.

Trading Outlook: A Defined Range, With Potential Triggers

Near-term technicals point to a defined range. WTI support sits in the mid-to-high $50s, with resistance around the low $60s. Brent finds support just under $60 and resistance near $63-$65. Liquidity constraints in holiday trading keep volatility muted. Stronger enforcement of sanctions, a new major supply disruption, or larger-than-expected inventory builds could push prices out of the trading range in early 2026.

Bottom Line: Oil’s Basic Bias for 2026

the case for oil remains bearish versus current spot levels, even if short-term spikes occur. Spot levels around $58 for WTI and $62 for Brent sit above the central 2026 forecast band of roughly $51-$55. Global inventories are expected to rise, non-OPEC production remains robust, and refining capacity plus Chinese exports curb margins. Geopolitical risk adds episodic upside,but it has not created a lasting premium in 2025. For now, oil behaves as a mid-cycle asset rather than a growth story, with natural gas and LNG showing tighter markets by comparison.

Final Verdict

Hold with a bearish tilt and treat rallies as selling opportunities.Maintain neutral exposure at current prices, and consider reducing or exiting positions if Brent sustains above the mid-$60s or WTI edges meaningfully above $60. The energy complex may offer selective opportunities in gas and LNG, but crude remains tethered to a comfortable global surplus until signs of tighter supply emerge.

Key Oil and Energy Metrics at Year-End 2025

Metric	End-Of-2025 Level	Notes
Brent crude	Approximately $62 per barrel	Near-weekly highs on risk premium; mid-$60s cap remains
WTI	Approximately $58.5 per barrel	Trading range reflects oversupply balance
Yearly change (YTD)	Brent ~ -17%; WTI ~ -19%	Bearish year despite rallies
Weekly gain (last full week)	Brent +~3%; WTI +~3%	Strongest weekly gain as October
2026 Brent forecast (official)	About $55 per barrel	Assumes inventory builds and non-OPEC growth
2026 WTI forecast (official)	About $51 per barrel	Lower than Brent; global oversupply backdrop persists
Regional benchmark – Louisiana Light	around $60.9 per barrel	Modest quality premium, no tight US Gulf market signals
Regional benchmark – Mars US	Around $70.0 per barrel	Sour-grade dynamics and freight impact
OPEC basket	Around $61.2 per barrel	Multi-crude mix reflects broader market tone
Bonny Light	Approximately $78.6 per barrel	Quality and regional demand keep it higher
natural gas (Henry Hub)	Approximately $4.34 per MMBtu	tighter than crude; winter demand supports prices
US rigs (oil)	About 409	Rig count stabilizing after prior cuts
Global stock builds (2026)	Above 2 million bpd	Major driver of the bear case for oil

Evergreen Take: What This Means for Investors and Readers

As the market transitions into 2026, the energy complex remains defined by a structural surplus in crude, offset by stronger demand signals in gas and LNG. Price action is highly likely to continue trading within a broad range,punctuated by episodic headlines that test liquidity. The clearest implication for readers is to view oil as a mid-cycle asset: opportunities exist in range-bound play, but sustained rallies require a meaningful shift in supply discipline or demand surprises. for households and businesses, the near-term message is to monitor refining margins and inventory data, especially in the first half of 2026, when the forecast imbalance could begin to tilt.

reader engagement

What single factor do you think will most influence oil prices in the first half of 2026: geopolitics, inventory dynamics, or demand shifts? Do you expect the Brent-WTI spread to widen or narrow in the coming months?

Share your view in the comments below and join the discussion. How will the evolving energy mix affect your energy strategy in 2026?

Brent Price Snapshot – Low $60s Amid Mixed Signals

• Current spot price: $64.2 /barrel (Brent) – aligned with Oslo Børs reporting on 27 Dec 2025.
• Weekly trend: Up 0.5 % on the final trading day, but overall range stuck in the low‑$60s for the past month.
• Key drivers: Geopolitical risk headlines versus a growing consensus on a bearish 2026 oil market outlook.

Major Risk Headlines Influencing Brent

Date	headline	Immediate Impact on Brent	Underlying Reason
12 Dec 2025	Middle East diplomatic talks stall	+0.8 % (brief rally)	Supply‑side uncertainty from potential Iran‑Saudi tensions.
20 Dec 2025	U.S. non‑farm payrolls miss expectations	-0.4 %	weak U.S. economic data reduces near‑term demand forecasts.
24 Dec 2025	EU carbon market prices hit record highs	-0.6 %	Accelerates shift to renewables, dampening long‑term oil demand.
27 Dec 2025	OPEC+ announces modest production cut extensions	+0.3 %	Provides short‑term price support but seen as insufficient for 2026.

Why Analysts See a Bearish 2026 Outlook

1. Oversupply Risk
• OPEC+ projected to increase output by 1.2 million bpd in 2026 to compensate for slower demand growth.
• U.S. shale production forecasted to rise by 800 k bpd, driven by lower breakeven costs.

2. Demand Headwinds
• Global oil demand growth expected to decelerate to 1.1 % YoY in 2026, well below the 2.5 % average of the past decade.
• International Energy Agency (IEA) predicts electric vehicle (EV) sales will represent 12 % of new car registrations worldwide by 2026, cutting gasoline consumption.

3. Policy & regulatory Pressure
• More than 30 countries have announced carbon‑pricing mechanisms exceeding $80/tonne, making fossil fuel‑intensive projects less attractive.
• EU’s “Fit for 55” legislation targets a 55 % reduction in transport emissions by 2030, directly curbing oil demand.

4. Economic Uncertainty
• Slower global GDP growth (projected 2.8 % in 2026) reduces industrial energy consumption.
• persistent inflationary pressures force central banks to maintain higher interest rates, limiting capital for oil‑intensive projects.

practical Tips for market Participants

• Risk Managers: incorporate scenario analysis that weights both short‑term geopolitical spikes and long‑term demand decline.
• Investors: Favor oil‑related assets with strong balance sheets and diversified revenue streams (e.g., upstream‑midstream hybrids).
• Traders: Use tight‑range straddles around the $60-$65 band to capture volatility from risk headlines without over‑exposing to directional moves.
• Corporate Procurement: Lock in multi‑year contracts at $65 +/barrel where possible to hedge against potential price rebounds from supply shocks.

Real‑World example: Kongsberg Gruppen’s Hedging Strategy

• context: As reported by Oslo Børs on 27 Dec 2025, Kongsberg Gruppen (heavy equipment) secured a forward Brent contract at $66 /barrel for 2026 deliveries.
• outcome: The hedge insulated the company from a projected 8 % decline in oil‑related revenue amid the bearish outlook, preserving EBITDA margins.
• Lesson: Proactive hedging can offset macro‑level market pessimism, especially when the underlying commodity remains in a volatile low‑price range.

Benefits of Monitoring Low‑$60 Brent Levels

• Early Warning Signal: Persistent low‑price trading often precedes structural demand shifts, prompting timely strategic adjustments.
• Cost Optimization: Companies can negotiate lower input costs for petrochemicals, transportation, and power generation when Brent remains subdued.
• Portfolio Diversification: Identifying sectors that thrive in a low‑oil environment (e.g., renewables, battery technology) enables balanced exposure.

actionable Checklist for Stakeholders

• Review current Brent exposure and compare against the $60-$65 target range.
• Update demand forecasts to reflect IEA EV penetration and EU carbon pricing impacts.
• Re‑evaluate capital allocation for oil‑focused projects versus green energy investments.
• Conduct quarterly stress tests incorporating both geopolitical spikes and bearish 2026 demand scenarios.

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Data sources: Oslo Børs market report (27 Dec 2025),International Energy Agency (IEA) forecasts,OPEC+ production plans,EU carbon market statistics.