Oil Outlook Remains Bearish As Asia, Geopolitics Drive Demand Shift

(MENAFN- Khaleej Times)

The global energy system enters 2026 in a state of transition defined by weak oil prices, shifting demand patterns, and geopolitical interventions that could permanently reshape oil and gas flows.

A new industry survey by Gulf Intelligence reveals an energy world bracing for softer prices, rebalanced markets, and a decisive pivot in trade flows across Asia, Europe, and the Americas.

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Oil executives overwhelmingly expect Brent crude - which averaged $69 in 2025, down from $81 the previous year - to decline further, with most betting that prices will land“closer to $60 or less” in 2026. Dave Ernsberger of S&P Global Energy reinforces this sentiment, predicting“dated Brent averaging $59 a barrel in 2026, extending the decline from $69 a barrel in 2025, before supply and demand begin to rebalance.”

Vitol's Tom Baker expects prices to remain“range‐bound” between $55–$60, cautioning that Opec would intervene should Brent slip into the low $50s. Yet the market's ability to absorb shocks may be limited. As Kpler's Amena Bakr warns,“We're probably going to be surprised by how much spare idle capacity is left in Opec+, held mainly by two or three countries.”

Despite the price slump, a majority of executives (65 per cent) agree geopolitics will remain a“sideline player” in determining 2026 oil prices - though this appears increasingly difficult to reconcile with unfolding global risks.

China, India and the Asian demand story

Asia remains a central force in 2026 energy dynamics. China, which added roughly 1 million barrels per day (bpd) to strategic storage in 2025, is expected by 50 per cent of respondents to continue stockpiling at similar levels. Vitol's Kieran Gallagher goes further, projecting Beijing could add 150 million barrels if prices stay low.

On demand, China is expected to add nearly 500,000 bpd of incremental consumption, supported by renewed stockpiling, according to Oil Brokerage's Anoop Singh. JLC's Victor Yang forecasts that Chinese imports will grow 2 per cent in 2026, up from 11.5 million bpd in 2025. India, which imported 1.5 million bpd of Russian crude in 2025, is expected to scale back. The plurality (45 per cent) sees 2026 imports landing closer to 1 million bpd, reflecting a strategic diversification away from over‐reliance on Moscow. Former IndianOil chairman Shrikant Madhav Vaidya notes this shift is driven by“India's own energy‐security imperatives rather than external pressure.”

LNG: Asia rebounds

as Europe stalls

Asia's LNG demand - down 5 per cent in 2025 - is widely expected to rebound, with 60 per cent of executives predicting growth of up to 5 per cent, and another 10 per cent expecting up to 10 per cent. Japan's nuclear reactor restarts, particularly the 1.35 GW Kashiwazaki‐Kariwa unit, could displace about 1 mtpa of LNG alone. Meanwhile, Europe - preoccupied with security risks - faces stagnant demand. Welligence's Marc Howson sees European LNG consumption“remaining broadly flat,” while Asian demand climbs. Anne‐Sophie Corbeau of Columbia University expects most new US LNG in 2026 to flow to Asia instead of Europe.

Venezuela impact

The US intervention in Venezuela looms large in executive sentiment. A striking 61 per cent believe Washington acted primarily to“enrich the Trump family,” while 26 per cent cite countering China's regional influence. Experts widely expect the intervention to shrink the dark‐fleet oil trade (49 per cent say it will get smaller), as US escrow controls tighten financial flows.

Analysts also predict long‐term constraints.“Venezuela's oil sector will remain structurally paralysed,” warns Jose Chalhoub,“without control of the armed forces and a full overhaul of PDVSA.”

Dr Raad Alkadiri adds that US custodial control could cap Venezuelan output below 1 million bpd through 2030. A majority of executives (57 per cent) believe the US is building a Western Hemisphere oil bloc capable of challenging Opec.

Outlook: A year of rebalancing

Despite early‐year surpluses of around 1 million bpd, the oil market is expected to rebalance by late 2026 as non‐Opec supply slows and demand firms.

SNOC's Khamis Al Mazrouei argues that demand will continue rising for“10–15 years,” placing a natural floor under prices. Whether 2026 becomes a year of stabilisation or further volatility may depend less on Opec+ and more on geopolitical shocks - ranging from Russia sanctions to Middle Eastern instability.

As BB Energy's Omar Najia puts it:“Market direction hinges on binary geopolitical outcomes rather than Opec+ decisions.”

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