Abundant oil supply, moderate demand growth
At the end of 2025, oil market fundamentals indicate that 2026 will begin with a sustained oversupply situation. Global supply is expected to increase by more than 2 million barrels per day (mb/d) in 2026. This growth remains well above demand, which is expected to increase by between 0.8 and 1 mb/d, against a backdrop of global industrial slowdown, persistent trade tensions, and accelerating energy transition in advanced economies and China. The market is therefore entering 2026 with a structural surplus, reinforced by the inertia of projects already underway.
In this context, prices are expected to remain on a downward trend. After stabilizing at around USD 68 at the end of 2025, Brent could average around USD 60 in 2026, its lowest level since 2021. The first half of the year appears to be the most vulnerable, due to the simultaneous arrival of new volumes and demand still constrained by the weakness of the manufacturing sector. The second half of the year remains more uncertain: developments in sanctions against Russia, Iran, and Venezuela, OPEC+ decisions on quotas, the reaction of US shale producers to lower prices, and the trajectory of global growth will be the main factors likely to influence price dynamics.
While the trajectory of OPEC+ production remains uncertain, supply growth in 2026 is expected to be driven mainly by non-OPEC+ countries. The United States will remain the world's largest producer, but its marginal contribution is expected to decline: WTI futures prices remain close to the break-even point for new shale wells—generally between USD 55 and 65—which is holding back investment, especially as costs rise due to steel tariffs. While production from shale basins is uncertain, conventional fields in Alaska and offshore in the Gulf of Mexico will continue to provide moderate support for growth. At the same time, global offshore production will remain an important driver in 2026, buoyed by the commissioning of new FPSOs in Brazil and Guyana, as well as stable growth in Norway. Canada will continue to expand its oil sands, while the ramp-up of the Vaca Muerta shale play in Argentina will also contribute to the increase in global supply.
Growth in oil demand will remain modest in 2026. Emerging economies will account for most of the increase in demand. India is expected to become the main driver of demand from 2026 onwards, buoyed by sustained growth and the still limited electrification of its vehicle fleet, while China will see weaker consumption growth due to a structural slowdown and the rapid electrification of transport. In Europe, the energy transition will continue to gradually reduce certain uses of oil.
The combination of moderate demand and abundant supply is expected to lead to a build-up of inventories in 2026, keeping the market in surplus and exerting sustained pressure on crude prices. In this context, the performance of oil companies will remain mixed: integrated majors will benefit from the resilience of their downstream and petrochemical activities, while high-cost producers—particularly some US shale players and complex offshore projects—will see their margins squeezed. Conversely, refining margins are expected to remain strong in 2026, supported by low crude prices and declining refining capacity in Europe and the United States, which is keeping refined product prices high.
Increased global LNG supply reshapes gas markets
Unlike the winters after 2022, when Europe managed to replenish its gas stocks to levels close to 95–100%, the continent is entering the winter of 2025–2026 with significantly lower levels: 83% on average, and 79% in North-Western Europe. Despite these historically low stocks, European gas prices have remained remarkably stable. This persistent (relative) weakness in the market can be explained primarily by the dominant factor that is currently redefining the global gas balance: the rapid increase in global LNG supply. In particular, the abundance of US LNG, available flexibly and in growing volumes, automatically reduces the strategic importance of European storage. The United States is establishing itself as the de facto storage hub, key supplier, and price benchmark for the global gas market, which reduces Europe's sensitivity to its own stock levels. Beyond the United States, liquefaction capacity is expected to increase significantly worldwide, particularly in Canada and Qatar.
In a context where European demand (seasonally adjusted) is expected to remain broadly stable, the expansion of global LNG supply will help stabilize TTF prices. These are expected to remain well below the peak of 2022, when prices exceeded EUR 120/MWh on average. However, prices will not return to the levels seen in 2018–2019, which hovered around EUR 15–20/MWh. With the average TTF stabilizing at around EUR 28–30/MWh in 2026, this would reflect a more relaxed market that is still structurally more expensive than before the energy crisis.
The increase in global gas supply will lead to moderation in prices, but there will be an exception in the United States. The Henry Hub could rise slightly, while remaining lower than any other regional price. This relative increase is due to lower inventory levels, a direct consequence of the rapid expansion of US LNG exports, which are absorbing a growing share of domestic production. In this context, the TTF–Henry Hub spread is expected to continue to narrow in 2026, after reaching its lowest level since the 2022 energy crisis at the end of 2025. Nevertheless, the United States will remain in a favorable competitive position.
Beyond Europe and the United States, gas markets will continue to be dominated in 2026 by Asia, which will remain the main source of global demand. Consumption there will grow moderately, driven by India and Southeast Asia, while China will see more measured growth. The abundance of LNG available worldwide should keep Asian prices (JKM) at moderate levels, well below the tensions observed in 2022, although an Asian premium will remain due to competition among buyers to secure cargoes.
The expansion of renewable energies will be driven by solar power
In 2026, renewable energies will continue their strong expansion. Solar energy will see the most significant growth, followed by wind power. While renewables accounted for only 14.6% of the primary energy mix in 2024, their share of electricity generation (32%) is expected to exceed that of coal by 2026. However, this rise will highlight the growing challenges associated with integrating renewables into electricity systems.
Regional disparities will remain pronounced. Asia will remain the main driver of growth, led by China—which will account for more than half of global additions—and India, where expansion is accelerating. Europe will continue to add capacity, but its progress will be hampered by grid bottlenecks, administrative delays, high financing costs, and integration difficulties. In the United States, momentum remains strong thanks to the Inflation Reduction Act, but it is being undermined by a more uncertain regulatory environment: possible changes to certain tax credits, tighter import restrictions, difficulties encountered by several offshore wind projects, and stricter authorization procedures on federal lands. In emerging economies outside Asia, growth will remain more uneven, often limited by access to financing and weak electricity infrastructure.
Supply variability of solar and wind power will increase the need for flexibility, storage, and grid reinforcement, while the proliferation of episodes of overproduction will require more precise management of balancing and interconnections. At the same time, the electrification of uses—heating, transportation, industry—will require massive investments in infrastructure. The future of renewables will therefore depend as much on the ability to integrate this production as on the addition of new capacity.
Risks related to supply chains will remain high. China dominates the production of solar modules, intermediate components, and key equipment, as well as the extraction and, above all, the refining of rare earths, which are essential for wind turbines. This concentration exposes the sector to geopolitical and industrial vulnerabilities.
Despite strong growth in installations, equipment manufacturers' margins remain under pressure. According to the IEA, photovoltaic prices in China have fallen by more than 60% since 2023, squeezing margins to around 10% and resulting in cumulative losses of around USD 5 billion since the beginning of 2024. In wind power, manufacturers outside China also recorded losses of around USD 1.2 billion last year, reflecting a high-cost environment and persistent supply chain tensions.
Energy
