Analyst remains bearish on crude oil; WTI to slide to $52, Brent $56-57

Geopolitical risk premiums hold crude from sharp-sell off

Crude oil prices are holding firm this week as tensions between Iran and the US temporarily ease after Donald Trump indicated he does not intend to launch military action. However, this calm may prove short-lived, as geopolitical risks in the Middle East remain elevated and could flare up again at any moment. Adding further support to prices are tightening global supplies following shutdowns at Kazakhstan’s Tengiz and Korolev oil fields, where fires damaged power generators and halted production.

 

Kazakhstan, now a major crude producer with a capacity of around 1.7 million barrels per day, thanks to extensive capex in recent years, is expected to keep both fields offline for another 10 days. Additionally, the country has curtailed nearly 900,000 bpd of output feeding the Caspian Pipeline Consortium terminal on Russia’s Black Sea coast due to recent drone strikes. These disruptions have contributed to a temporary supply squeeze, helping crude oil prices remain resilient despite broader market uncertainties. 

 

Trade war fears are intensifying as the IMF warns that ongoing “tit-for-tat” tariff measures pose a significant threat to global growth in 2026. The Fund cautions that escalating protectionism could disrupt trade flows, weaken business confidence, and slow economic momentum worldwide. In response to mounting pressure, EU leaders are considering activating the “Anti-Coercion Instrument,” a policy framework designed to counter economic pressure from foreign governments. If implemented, it could trigger one-for-one retaliatory tariffs on US goods, raising the risk of a broader transatlantic trade dispute and adding further uncertainty to the global economic outlook. 

OPEC

OPEC+ has decided to keep production restoration steady at December levels through Q1-2026 to help balance the market. The alliance restored roughly 3 per cent of global output during 2025, pushing the market into an estimated surplus of about 1.5 mbpd by year-end. In its November 2025 meeting, OPEC+ confirmed a planned +137,000 bpd production increase for December but signalled a pause in further hikes during Q1-2026 amid growing concerns over a widening global oil surplus.

 

At the same time, the EIA revised its 2026 US crude oil production forecast upward to 13.59 million bpd, compared with 13.53 million bpd previously, even as it trimmed other US output expectations. These adjustments underscore persistent supply-side pressures heading into 2026. 

Demand and supply scenario: The 2026 glut 

The defining feature of the 2026 oil market is a widening imbalance between supply and demand. On the demand side, global consumption is projected to rise by 1.1–1.3 million barrels per day (mb/d)—a modest increase compared with the strong post-pandemic rebounds. Much of this incremental demand is now driven by petrochemical feedstocks and aviation, while traditional road-fuel consumption continues to flatten due to efficiency gains and growing electric-vehicle adoption.

 

On the supply side, global output is expected to increase by 1.4–2.1 mb/d, outpacing demand growth. Production in the Americas—led by the US, Brazil, and Guyana—remains at record or near-record levels, adding persistent upward pressure on global supply. Meanwhile, OPEC+ has signalled it will hold output steady through Q1-2026, following the restoration of roughly 3 per cent of global supply in 2025, a move that has already amplified fears of a deepening surplus.

 

Outlook: We hold a bearish stance on crude oil for the medium to long term. WTI prices are expected to slide towards $52/b by H1/2026, while Brent may still hold risk premiums to perform better than WTI, but we still expect Brent to slide towards $56-57 by H1-2026. 

 

(Disclaimer: Mohammed Imran is a research analyst at Mirae Asset Sharekhan. Views expressed are his own.)