On the last day of 2025, the energy world is caught between ambition and reality. We are 25 years from net zero, yet still deeply reliant on oil. Even so, and despite lingering geopolitical tensions across key producing regions, oil prices have stayed comfortably below the $100-a-barrel mark. As we enter the new year, most analysts expect oil to remain well below even the $60/b mark. Even if prices rally, most expect no dramatic spikes, with Brent, the world’s main crude benchmark, likely to remain in a sweet spot in the $60s.

This may not be the best news for Middle Eastern crude producers whose economies and spending plans hinge on higher oil revenue. However, for billions of people around the world, lower oil prices mean cheaper travel, cheaper goods and a more affordable cost of living.

As the year ends, I take a look at the trends likely to shape oil prices and demand over the next 12 months.

Sweet sixties

Oil prices, or specifically benchmark Brent, are set for a muted start to the year, after posting their steepest annual decline since 2020, after the height of the Covid-19 lockdowns.

As my colleague Fareed Rahman writes, the oil market is moving into a phase of structural imbalance, with supply growth expected to run at around three times the pace of demand despite steady gains in consumption.

What does the demand outlook look like in 2026?

Global oil demand is expected to rise by about 900,000 barrels per day in 2025, taking total consumption to roughly 105.5 million bpd. A similar increase is forecast for 2026, with growth picking up further in 2027.

Where is the imbalance?

Supply is set to grow much faster than demand in 2025 and 2026, at roughly three times the pace. That expansion is being driven by higher output from both Opec+ and non-Opec producers.

What’s the impact on price?

Brent crude is likely to slip below $60/b in 2026, fall into the low $50s by Q4 and potentially end the year at even lower levels, according to Ahmad Assiri, a research strategist at Australia-based broker Pepperstone. UBS expects Brent to trade between $60 and $70 a barrel next year, with only brief excursions outside that range.

Oil on water

2025 has been a year of sanctions and captured oil tankers, whether they’re Russian, Iranian or Venezuelan. With so much embargoed oil in the sea, it is unsurprising that oil prices remain depressed. But with oil tankers floating with no specific destination in sight, does it imply a collapse in demand?

Kpler’s Amena Bakr writes that the build-up of crude at sea does not mean lower demand. She points to the persistent decline in product stocks, which shows people are still consuming even if unrefined crude still remains lost at sea.

Why is there oil on water?

Since early September, an additional 215 million barrels of crude have accumulated at sea, increasing oil-on-water volumes by about 19 per cent, according to analysts at Kpler. Total oil floating on the water is now around 1.3 billion barrels.

Is this a 2020 repeat?

Not quite. While the surplus is becoming more visible, it remains manageable. Unlike 2020, when storage ballooned as demand collapsed, today’s build-up is happening alongside healthy product demand and strong refining margins.

Could this surplus find buyers?

Yes. Pricing dynamics, including discounts on crude, particularly Russian Urals, are likely to encourage additional buying, particularly from major importers such as India and China.

Jargon buster

Inventory: While it could mean a number of things outside the energy world, traders use this word to describe stockpiles of crude oil and refined products such as gasoline and diesel.

Big number

$100 per barrel

Once the oil market’s north star, $100 crude last flashed on screens in 2022 after Russia’s invasion of Ukraine. As the industry looks ahead to 2026, that price point is increasingly a relic of the oil age.

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