US Oil Industry Braces for Lower Prices in 2026

Experts warn that global energy markets could be oversupplied in the near term, which is expected to further weigh on oil prices.

An oil pump continues to operate in the Los Angeles area. John Fredricks/The Epoch Times

The price of crude oil has fallen sharply this year, and the energy industry is bracing for lower prices in 2026.

Prices for a barrel of West Texas Intermediate crude oil, the U.S. benchmark, have declined about 15 percent, to around $61 a barrel on the New York Mercantile Exchange.

U.S. oil prices had slipped below $58, before climbing on tighter enforcement of sanctions on Russian petroleum exports and the potential disruption of energy flows.

Still, despite the geopolitical-driven periods of volatility this year, oil’s overall performance since mid-January may be indicative of what the energy industry could expect heading into 2026.

“We’re prepared for prices in 2026 to be lower than they were in 2025,” Chevron CEO Mike Wirth said during an Oct. 29 interview with Fox Business host Maria Bartiromo.

Experts warn that global energy markets could be oversupplied in the near term, which is expected to further weigh on oil prices.

The Organization of the Petroleum Exporting Countries (OPEC) and its allies, OPEC+, plan to bolster output and bring daily production levels to 4 million barrels.

OPEC will convene its next meeting on Nov. 2, and officials are widely expected to agree to an additional increase of supply by 137,000 barrels per day for December.

“The uncertainty surrounding sanctions on Russia also supports this increase. However, the move will only reinforce the bearish outlook for the market, adding to the substantial surplus expected through 2026. Obviously, this is assuming no supply shocks from Russia,” ING commodity strategists said in an Oct. 31 note.

Oil supply growth among other non-OPEC+ producers, such as Argentina, Brazil, Canada, and Guyana, is expected to be approximately one million barrels per day next year, the International Energy Agency (IEA) projected in September.

U.S. producers, meanwhile, are also ramping up their output, totaling 13.644 million barrels per day, according to the latest data from the Energy Information Administration (EIA).

A challenge for worldwide energy markets has been waning demand.

In the year ahead, the IEA’s global oil demand outlook is unchanged, “with growth of around 700 kb/d [thousand barrels per day] expected for both 2025 and 2026.”

“Global stocks are forecast to rise by an untenable 2.5 mb/d on average in the second half of 2025 as supply far outstrips demand,” its Oil Market Report stated.

As a result, the World Bank estimates that Brent crude oil prices—a benchmark for global oil prices—could average around $60 a barrel. This, the organization notes, is part of the broader decline in international commodity prices.

“In 2026, commodity prices are forecast to fall by a further 7 percent, a fourth consecutive year of decline, as global growth remains sluggish and the oil market oversupplied,” the World Bank said in its latest Commodity Markets Outlook, released on Oct. 29.

“Key downside risks include weaker-than-expected global growth, a longer-than-assumed period of economic policy uncertainty, and additional oversupply of oil.”

Estimates—for both the U.S. and global benchmarks—have varied in recent weeks.

The logo of the Organization of the Petroleum Exporting Countries (OPEC) at its headquarters in Vienna, Austria. Reuters/Leonhard Foeger

Writing in its latest Short-Term Energy Outlook, the EIA projects Brent to decline to $52 a barrel, from its current level of $64.

U.S. oil and gas executives forecast West Texas Intermediate prices to be $64 over the next 12 months, according to the third-quarter Federal Reserve Bank of Dallas Energy Survey.

Either way, the current direction may pose a fresh challenge for an industry whose breakeven price ranges between $61 and $70 a barrel.

Production Strong Despite Prices

For now, the sector appears indifferent to the present trajectory of oil prices.

Recent earnings reports indicate the oil and gas industry is going full throttle—at least for now.

Exxon Mobil said it generated record output of almost 1.7 million oil-equivalent barrels per day in the Permian Basin—the largest domestic oilfield.

“We’ve now started up eight of our 10 key 2025 projects, with the remaining two on track. No one else in our industry is executing at this scale, with this level of innovation, or delivering this kind of value,” Exxon Mobil wrote in its third-quarter earnings report.

Chevron also confirmed record output of 4.1 million barrels of crude oil per day in the third quarter, up 21 percent year over year.

Still, falling oil prices have taken a bite out of these companies’ earnings.

Chevron’s third-quarter earnings, for example, declined 21 percent year over year, to $3.6 billion, while Exxon reported a 12 percent year-over-year drop, to $7.55 billion.

“Both face the same test: protecting profitability and capital discipline in a lower-price environment while reassuring investors about cash returns and production outlooks,” Ipek Ozkardeskaya, senior analyst at Swissquote Bank, said in a note emailed to The Epoch Times.

Baker Hughes CFO Lorenzo Simonelli expects potential headwinds for near-term revenue growth if there is restraint amid possible oversupply.

“Looking ahead to 2026, early indicators point to another year of subdued activity possibly leading to another year of global upstream spending decline,” Simonelli told shareholders and analysts on an Oct. 24 earnings call.

But lower oil prices also mean less pain at the pump for motorists.

The national average price for a gallon of gasoline is slightly above $3, according to the American Automobile Association. Should the bearish outlook persist in oil markets, drivers could continue seeing local stations rolling back their prices heading into the busy Thanksgiving and Christmas travel season.