Analyst holds bearish long-term outlook for crude oil; WTI to slide to $52

WTI Crude oil prices are currently fluctuating within a $57–$60 range, caught between a long-term supply overhang and persistent Middle Eastern tensions. While recent unrest in Iran briefly pushed prices above $60, the "geopolitical risk premium" began to fade as immediate fears of a US strike receded. Prices retreated further on Thursday following Ukrainian President Zelenskyy's announcement at the World Economic Forum in Davos. He revealed that the US, Russia, and Ukraine will hold their first trilateral meeting in the UAE this weekend (January 23–24) to discuss ending the war. 

Monthly oil market report

Oil prices are currently finding support from revised projections by major energy IEA Surplus Revision the International Energy Agency (IEA), in its January 21, 2026 report, lowered its global crude surplus estimate for the year to 3.69 million bpd (rounded to 3.7 million), down from the 3.815 million bpd projected in December. This adjustment stems from a firmer demand outlook, with the IEA raising its 2026 demand growth forecast to 930,000 bpd. Despite the trim, the agency warns that a "significant surplus" remains structurally present in the global market. On the other side the US Energy Information Administration (EIA) raised its 2026 US crude production forecast to 13.59 million bpd, up from 13.53 million bpd. 

 

Economic headwinds from China

 

The world's second-largest economy continues to signal weakness. In the final quarter of 2025, China's GDP growth slowed to 4.5 per cent, while retail sales growth stalled at a mere 0.9 per cent in December—far below market expectations. Manufacturing activities across the US, EU, and China also signalled contraction, reflecting a global industrial slowdown.

Supply disruptions & geopolitical conflict

Conversely, the supply side is facing severe tightening:

 

Kazakhstan supply shock: In January 2026, Kazakhstan was forced to curb approximately 900,000 bpd of production. This followed Ukrainian drone strikes on the Caspian Pipeline Consortium (CPC) terminal on Russia’s Black Sea coast, which handles 80 per cent of Kazakh exports. 

Russian refinery campaign: Over the past five months, Ukrainian strikes have targeted at least 28 Russian refineries, crippling Moscow's ability to export refined products. Maritime Insecurity: At least six tankers have been attacked in the Baltic Sea since November, further straining seaborne logistics.  New sanctions regime: The implementation of the EU’s 18th sanctions package on January 21, 2026, has added another layer of complexity. These new rules ban the import of refined products from third countries (like India or Turkey) if they are derived from Russian-origin crude. This "secondary" ban is creating a significant "risk premium," keeping prices elevated despite the softening global demand.

US weekly crude report remain bearish demand slump

The overall EIA published weekly crude oil report from US showed a bearish picture with crude supplies at Cushing, the delivery point of WTI futures, rose +1.428 million bbl to a 9-month high. EIA distillate stockpiles rose +3.3 million bbl to a 2-year high, a larger build than expectations of +1.6 million bbl. Crude production stood around 13.72mbpd but gasoline demand slid to 7.85mbpd last week, that could be due to the ongoing Arctic blast in the US/Canada region, affecting the demand adversely.

Outlook 

We maintain a bearish long-term outlook for crude oil. Driven by a projected 2.3 million bpd surplus and rising global inventories, crby H1-2026. While Brent should retain a geopolitical risk premium, it is similarly forecasted to retreat toward $56–$57/b as supply growth from non-OPEC+ producers outweighs softening demand.  ================== 

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