Wall Street's top five investment banks agree: the “darkest hour” for oil prices has not passed, and 2026 may drop by $59

The Zhitong Finance App noticed that oil prices experienced the worst year since the pandemic, and Wall Street believes the decline is not over yet.

According to the predicted average of Bank of America, Citigroup, Goldman Sachs Group, J.P. Morgan Chase, and Morgan Stanley, Brent crude oil futures, which currently trade at around $62 per barrel, will fall further to about $59 in 2026. This year, this international benchmark price has dropped 17%.

The average forecast of these five banks shows that as global production exceeds demand growth, the global oil market will face an excess of about 2.2 million b/d next year.

The surpluses predicted by these banks are lower than the estimates of the International Energy Agency (IEA), an advisory body for major economies. The IEA expects a record surplus of 4 million b/d, but the IEA also believes that adjustments in oil producing countries may curb the scale of the surplus.

The oil surplus problem is getting worse

Among the five major banks Goldman Sachs, Citibank, J.P. Morgan Stanley, and Bank of America, Goldman Sachs Group holds the most pessimistic forecast. Its average annual price is 56 US dollars per barrel, while Citigroup is the most optimistic, with an average forecast price of 62 US dollars. This is a departure from the position the two banks have often taken in the past.

Goldman Sachs believes that oil projects that were postponed during the COVID-19 pandemic will be put into operation, bringing new supply to the market. Citigroup, on the other hand, believes that China's continued inventory accumulation will prevent excess supply from having a greater impact on oil prices.

J.P. Morgan expects the oil surplus to be less than what book numbers show, as the Saudi Arabia-led OPEC+ coalition could reverse strategy and cut production drastically by mid-next year.

Bank of America, on the other hand, assumes that OPEC+ will resume increasing production after the planned suspension in the first quarter.