OIL OUTLOOK 2026

In 2026, oil is expected to remain under pressure due to persistent global oversupply—driven by sluggish demand (notably from China’s rapid EV adoption), OPEC unwinding pandemic-era production cuts, and new output from Brazil, Ghana, and Norway—marking a sixth consecutive year of oversupply. While downside is limited below $55/barrel (the “pain threshold” for producers), there’s little catalyst for price gains, especially if Russia-Ukraine peace talks succeed. Despite weak oil prices, energy stocks—particularly majors like Exxon and Chevron—may still perform well thanks to disciplined capital spending and strong shareholder returns via dividends and buybacks. Meanwhile, the bigger energy story lies in AI’s surging electricity demand, which is transforming utilities and power producers into hot sectors; however, rising power bills risk regulatory and political backlash, even as electricity demand is projected to grow 2–3% annually through 2030, with the next five years potentially matching the prior 25 in total demand growth.

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