Barclays has cut its Brent crude oil forecast for 2026 by $4, bringing it to $66 per barrel. This change is based on the belief that OPEC+ will completely end its voluntary supply cuts by September 2026. The bank noted that OPEC+ has recently decided to raise the production target for October by 137,000 barrels per day. This is seen as the first step in reversing the 1.66 million barrels per day cuts made in May 2023, with a potential full return to previous levels in a year.

Gradual Unwind Pace

Barclays indicated that the pace of this reduction is slower than expected. Even with the cautious increase, strong spot market fundamentals and a significant valuation difference continue to lead Barclays to have a positive outlook on oil prices since early July. The long-term forecast for Brent crude up to 2026 is now gradually declining, with estimates moving toward the mid-$60s. This is mainly due to the expectation that OPEC+ will slowly add more supply back to the market over the next year. Their plan to eliminate the voluntary cuts from May 2023 indicates a better-supplied market in the future. In the short term, however, there are reasons to believe prices will stay strong. The recent choice to increase October’s output targets was modest, suggesting that the pace of supply recovery will be slower than many expected. This cautious approach supports prices in the near term. Current fundamentals in the physical market are robust, which helps explain the difference between short and long-term views. For example, last week’s EIA report showed an unexpected drop in U.S. crude inventories by 3.2 million barrels, despite expectations for a build. China’s crude imports for August also remained strong at over 11 million barrels per day, indicating healthy demand.

Compelling Market Structure

This creates an attractive market for traders, with near-term contracts likely to perform better than long-dated ones. Strategies that take advantage of this widening gap, like calendar spreads, could be beneficial in the coming weeks. The current market tightness is keeping immediate prices high, even as the outlook for 2026 softens. OPEC+’s measured strategy is not new; a similar approach was seen from 2021 to 2022. The group managed the return of production carefully then, which supported prices for a long time. Their current cautiousness suggests they want to maintain the market balance they have worked hard to achieve. Create your live VT Markets account and start trading now.

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