SunSirs: Global Crude Oil Market Uncertainty Rises in 2026

Against a backdrop of escalating geopolitical tensions, international oil prices surged recently before stabilizing and retreating. Currently, amid oversupply conditions, global crude oil inventories are projected to continue climbing through 2026. Analysts suggest that potential uncertainties in the international oil market will increase, potentially intensifying price volatility.

Crude Oil Market Volatility Intensifies

According to Reuters, entering 2026, the U.S. threat of military intervention against Venezuela and its escalating military actions have heightened geopolitical risks in the Middle East. Concerns over oil supply disruptions driven by these developments supported crude prices, which rose for five consecutive trading days from January 8 to 14. London Brent crude futures surpassed $66 per barrel, marking the highest level since November 2025. However, oil prices recently halted their rise and experienced a significant decline following reports that the U.S. may delay a military response against Iran. Reports indicate that geopolitical tensions remain the most significant uncertainty factor affecting the oil market.

On January 17, U.S. President Donald Trump announced via social media that he would impose a 10% tariff on imports from Denmark, Norway, Sweden, France, Germany, the United Kingdom, the Netherlands, and Finland starting February 1. He further declared that the tariff rate would increase to 25% starting June 1, unless an agreement is reached regarding the U.S. “comprehensive and complete purchase of Greenland.” Multiple European Parliament members stated on the 17th that the trade agreement reached between the US and EU last July would be impossible to ratify given Washington's threats over Greenland. They simultaneously called for counter-coercion tools to respond to the US tariff hikes. This sudden geopolitical tension will significantly disrupt market sentiment, driving short-term movements in gold, crude oil, and major forex pairs.

Experts note that geopolitical risks inherently drive risk premiums in oil pricing. Moreover, this dispute directly impacts multiple European energy importers and North Sea crude producers like Norway and the UK. While the tariff threat currently lacks specific commodity classifications, any measures hindering transatlantic trade flows could disrupt global crude trade patterns, triggering market concerns over supply stability.

According to U.S. media reports, Gertken, Chief Geopolitical Strategist at BCA Research, stated that recent tensions in Iran have elevated the probability of a “significant global oil supply shock” to approximately 40%. In a recent client report, he noted that a collapse of the Iranian regime coupled with escalating regional conflict could lead to a “substantial reduction” in the region's oil production.

Analysts at Deutsche Bank also cautioned that the risk of an oil price shock this year cannot be overlooked. In a recent client report, the bank stated: “A positive supply shock in oil prices would have a substantial impact on inflation expectations and inflation risks.” The bank listed this scenario as one of the key risks in its economic outlook.

Historically, geopolitical regime changes in oil-producing nations have often signaled sharp oil price increases. JPMorgan research indicates that since 1979, eight such events have driven crude prices up by 30%, with peaks reaching 76%, typically exerting lasting effects on the market.

Several major Wall Street banks hold more bullish views on oil prices. Citigroup raised its near-term benchmark forecast for Brent crude to $70 per barrel, citing widening geopolitical risk premiums related to Iran and ongoing export disruptions in countries like Libya and Algeria.

However, other analyses suggest that even if large-scale conflict in the Middle East causes partial supply disruptions, spare capacity in other regions could sufficiently fill the gap, significantly reducing the substantive threat to supply from geopolitical risks. A December 2025 report from the U.S. Energy Information Administration indicates that approximately 1.7 million barrels per day of global crude supply growth in 2025 will originate from non-“OPEC+” nations, with Brazil, Guyana, and Argentina collectively contributing nearly 30% of this increase.

Crue Oil Market Faces Significant Supply Surplus

Although geopolitical tensions have driven recent oil price increases, weak fundamentals continue to cast a shadow over the oil industry's medium-term outlook. Against a backdrop of sluggish demand growth, the global oil market is facing a substantial supply surplus this year as OPEC+, other major producers, and emerging producers ramp up output.

The International Energy Agency (IEA) noted in its December 2025 monthly report that the global crude oil supply surplus could reach as high as 3.84 million barrels per day in 2026.

Rob Tumel, senior portfolio manager at Totes Capital Management, stated in a report: “Oil prices had already declined due to oversupply in the global oil market. The current events in Venezuela will not alter this dynamic.”

A survey of 34 economists and analysts released by Reuters earlier this month further corroborated this bearish sentiment. The survey indicates that the global oil market will remain under pressure through 2026 as rising supply and weak demand suppress prices. It projects the average price of Brent crude at $61.27 per barrel in 2026, down from the $62.23 forecast in November 2025; while the average price for U.S. crude is projected at $58.15 per barrel in 2026, down from the previous forecast of $59.00 per barrel.

Bridget Payne, Head of Energy Forecasting at Oxford Economics, stated: "Maintaining stable production through the first quarter of 2026 will help limit near-term price volatility and provide some support, but it won't fundamentally alter the underlying surplus situation. Even with unchanged quotas, supply is expected to exceed demand, keeping prices under pressure throughout the year."

In its January 14 monthly oil market report, OPEC maintained its previous forecast for global oil demand growth in 2026 and released its first-ever demand projection for 2027. The report projects that in 2026, global average daily oil demand will increase by 1.38 million barrels compared to 2025, reaching 106.52 million barrels; in 2027, global average daily oil demand will increase by 1.34 million barrels compared to 2026, reaching 107.86 million barrels. The report states that of the 1.24 million barrels of growth in global average daily oil demand in 2027, 1.24 million barrels will come from non-OECD countries. The report indicates that global daily oil demand in 2025 will remain at 105.14 million barrels, consistent with the forecast from the previous month's report.

Potential Uncertainties in Oil Market Escalate

The United States' recent large-scale military operation against Venezuela has drawn criticism from some European financial institutions. Multiple parties believe this move may heighten global investors' concerns over geopolitical uncertainties, potentially impacting supply and risk expectations in the international oil market.

Marshall Aleksandrovich, an analyst at Salt Marsh Economics in the UK, stated that current geopolitical risks significantly exceed those faced under previous U.S. administrations. From trade frictions to Middle East tensions and the recent Venezuela incident, investors must navigate multiple overlapping political risks that are reshaping market sentiment and investment decisions. “The magnitude of uncertainty the market must confront far exceeds historical precedents,” Aleksandrovich remarked.

Tina Fordham, founder of Fordham Global Outlook, pointed out that unilateral U.S. actions have heightened market uncertainty. She believes investors hold optimistic expectations regarding the Venezuelan situation, but the reality may prove more complex and volatile. Political intervention could disrupt market sentiment in the short term while increasing uncertainties surrounding supply and investment.

The prevailing market view holds that international oil prices remain primarily driven by global economic growth, major oil-producing nations' policies, and inventory changes. However, the U.S. military's large-scale strike against Venezuela serves as a stark reminder that unilateral actions can intensify geopolitical uncertainties, exposing the global energy market to potential risks.

Some experts suggest that the U.S. dollar index will continue weakening in 2026, prolonging market pessimism and keeping gold prices elevated. Amid multiple factors, the trajectory of the crude oil market grows increasingly uncertain, while escalating geopolitical conflicts will further intensify short-term price volatility.

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