The U.S. Energy Information Administration is projecting lower oil prices in the first quarter of 2026, though some industry experts are anticipating prices to rise again in the long term next year.
The administration, which is part of the U.S. Department of Energy, forecasts the Brent crude oil price will be about $55 per barrel on average in the first quarter of next year, down from $69 per barrel this year.
The Brent prices come from oil produced in the North Sea, which is used as a benchmark for oil pricing across the globe.
Ramanan Krishnamoorti, the vice president for energy and innovation at the University of Houston, said OPEC+ is ramping up oil production, increasing the supply. A ceasefire between Russia and Ukraine, improving relations between Iran and the U.S. and American seizures of Venezuelan oil could also increase the oil supply, he said.
“There’s going to be a steady pressure on crude oil to be lower in price,” Krishnamoorti said. “A lot more supply is coming online.”
Demand is also falling, Krishnamoorti said. That’s because China has seen less of a demand for oil as its economy slows and the country transitions to more electric vehicles.
“For multiple reasons, China’s softness (is) likely to continue into the next year,” he said. “That’s going to keep the demand side of the marketplace very, very soft.”
Mark Finley, the nonresident fellow in energy and global oil at Rice University’s Baker Institute for Public Policy, said declining oil prices are in line with the current trend of falling gas prices – which can have far-reaching effects.
“Not only do they impact the pocketbooks of gasoline consumers, households, families, they also play a significant role in driving consumer and business confidence as well as, you know, the approval ratings of politicians who are in office at the time,” he said.
While the U.S. Energy Information Administration predicts lower oil prices at the start of the new year, others in the industry remain optimistic for a rise in prices.
Haynes Boone, a law firm with practice areas including the energy sector, recently released its Fall Energy Bank Price Deck Survey. The survey found that while prices are expected to dip in the short-term, price projections in the long-term remain steady.
Jay Young is the CEO of King Operating Corporation, an oil and gas operating company based in Dallas. He said rig counts are down and oil and gas wells have declined.
“We haven’t been drilling for a long time,” he said.
Young expects to see oil prices rise next year as a result.
“We’re going to need more oil in the United States,” he said. “And if we don’t have it, it’s going to be worth more money.”
Oil prices rise and fall in cycles, Young said.
“It’s always cyclical,” he said. “It’s going to go up, it’s going to go down, based on geopolitics, based on production, based on a lot of different factors.”
