Oil's wild first half of the year upended everything Wall Street expected

Oil marketplace watchers entered 2026 wide successful statement connected an emerging multibillion-barrel glut that was definite to depress prices passim the year. That is not what they received.

Instead, a bid of unexpected geopolitical catalysts — supra all, the warfare successful Iran — pushed lipid prices to levels not seen since 2022, creating the largest vigor proviso daze connected grounds and forcing traders to acceptable speech each expectations for the archetypal fractional of the year.

Now, with Persian Gulf lipid exports renormalizing arsenic the warfare successful Iran seemingly winds down, traders participate the 2nd fractional of the twelvemonth successful an uneasy calm aft the storm.

"Despite the regular noise, markets consciousness remarkably calm, but comfortableness is not the aforesaid arsenic clarity," Macquarie commodities strategists, led by Peter Taylor, wrote to clients.

"H2-26 whitethorn beryllium calmer, but we person acceptable the country for surprises."

'Cartoonishly oversupplied'

Coming into 2026, Brent (BZ=F) futures, the planetary crude lipid benchmark, were trading astatine $60 per barrel; those connected US benchmark WTI crude (CL=F) were trading adjacent $57. Just 2 weeks earlier, successful the mediate of December, prices connected some contracts had fallen to levels not seen since 2021.

Through the backmost fractional of 2025, the Organization of the Petroleum Exporting Countries and its allies (OPEC+) unwound accumulation cuts astatine a important rate, expanding the magnitude of barrels added to the marketplace each month, portion different supplier countries extracurricular of the Americas raised their ain outputs. Sea-bound lipid volumes crossed 1 cardinal barrels.

Read more: You tin commercialized lipid futures. What to cognize earlier you start.

Taken together, the International Energy Agency estimated that the lipid marketplace would beryllium oversupplied by astir 4 cardinal barrels per time successful 2026, with prices expected to extremity the twelvemonth little than they started.

"At the hazard of flogging a precise dormant horse, our connection to the marketplace has remained accordant since June 2023," JPMorgan strategists wrote successful a enactment to clients successful December. "While request is robust, proviso is simply excessively abundant."

The lipid market, Macquarie analysts wrote astatine the time, was "cartoonishly oversupplied."

The archetypal hints that 2026 whitethorn not shingle retired arsenic expected arrived successful the aboriginal hours of Jan. 3, arsenic quality broke that US commandos had forcibly extracted Venezuelan President Nicolás Maduro, mounting the signifier for a US takeover of the country's lipid industry, which had agelong sold sanctioned lipid to China and a tiny fistful of different buyers.

Venezuela is believed to clasp the world's largest lipid reserves, estimated astatine astir 300 cardinal barrels of dense crude, but the manufacture had fallen into disrepair implicit the preceding decades, leaving lipid traders unsure of what an eventual restart could look like. Benchmark lipid futures mostly held steady, ticking up lone slightly.