We face a sharply divided outlook for the oil market in 2026. Major agencies still cannot agree on whether the market will be balanced or in a large surplus. This uncertainty is keeping Brent crude steady near $67.6 per barrel. For derivatives traders, this split in forecasts can create clear opportunities in the weeks ahead.
Geopolitics is still a key support for prices and helps justify a risk premium. Reports from early February say US-Iran talks have stalled. The US Treasury has also widened sanctions on groups believed to be moving Iranian oil. With roughly 1.5 million barrels per day of Iranian supply still at risk, prices have held up even as some forecasts turn bearish.
Geopolitical Risk And Price Support
Supply chain changes are also tightening the market, especially as India keeps cutting its reliance on Russian barrels. Indian imports of Russian crude fell almost 20% in the final quarter of 2025 due to payment problems. That pushed buyers into the spot market for Middle Eastern and African grades. The rush for replacement barrels is supporting prices in the near term.
Still, the risk of oversupply in the first half of this year is real. It should not be ignored. This week’s news that Kazakhstan’s Kashagan field is ramping up earlier than planned after January maintenance could add 400,000 barrels per day by March. That lines up with the IEA’s view that a glut of more than 3 million barrels per day is possible in this half of the year.
We have seen this kind of split between agencies before. In 2024, the IEA and OPEC differed on demand growth by more than 1 million barrels per day, which helped drive similar volatility. On top of that, January 2026 US inflation came in slightly above expectations. That adds downside risk to demand because it could delay interest rate cuts.
With a likely near-term surplus followed by a possible deficit later in the year, calendar spreads are starting to look attractive.
Trading Ideas For The Curve
Traders may want strategies that benefit from near-term weakness or sideways trading. One approach is selling out-of-the-money calls in the March and April contracts. At the same time, buying longer-dated calls for the third and fourth quarters could position for a supply deficit in the second half of the year.
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