Barclays has significantly revised its Brent crude oil price forecasts upward for 2025 and 2026, signaling a more robust market outlook driven primarily by strengthening fundamental conditions rather than immediate geopolitical factors. This re-evaluation by the financial institution underscores a shift in market perception, where underlying supply-demand dynamics are increasingly dictating price trajectories even as geopolitical risk premiums dissipate.
Revised Price Forecasts
The firm now projects Brent crude at $72 per barrel for 2025 and $70 per barrel for 2026, reflecting increases of $6 and $10, respectively, from earlier estimates. These upward adjustments primarily stem from a tightened global crude oil balance. For instance, inventories notably declined in the second quarter despite an accelerated output pace from the Organization of the Petroleum Exporting Countries and its allies (OPEC+). Analysts point to stronger demand growth, weaker non-OPEC supply expansion, and the International Energy Agency’s (IEA) upward revision of baseline demand estimates as key drivers for this tighter market.
Key Drivers of Market Tightness
Demand-Side Dynamics
Barclays has notably elevated its outlook for global oil demand growth by 260,000 barrels per day (bpd), with significant contributions anticipated from Organisation for Economic Co-operation and Development (OECD) countries. Specifically, U.S. oil demand is now forecast to expand by 130,000 bpd this year—a 100,000 bpd increase over previous projections. This upward revision for U.S. demand is partly attributed to an early-year demand surge, though a gradual slowdown in activity is still expected in the latter part of the year, consistent with broader economic trends.
Supply-Side Considerations
On the supply side, while OPEC+ is accelerating the phase-out of its voluntary production cuts, actual output increases are expected to lag behind stated targets. This discrepancy is largely attributed to internal pressures on some OPEC+ producers. These nations are often compelled to curb their output to compensate for prior instances of exceeding their assigned quotas. This dynamic frequently results in improved collective compliance for the group as a whole but translates into a slower effective growth in overall global crude supply. Such internal constraints within the cartel play a crucial role in shaping the actual market availability of oil.
Michael Carter holds a BA in Economics from the University of Chicago and is a CFA charterholder. With over a decade of experience at top financial publications, he specializes in equity markets, mergers & acquisitions, and macroeconomic trends, delivering clear, data-driven insights that help readers navigate complex market movements.