Morteza Behrouzifar, a faculty member at the Institute for International Energy Studies, said oil prices in 2025 were lower than the previous year and recent experience suggests the market can better absorb disruptions. Speaking to Shana ahead of 2026, he noted that despite the war in Ukraine and sweeping sanctions on Russia — one of the world’s largest oil producers — prices rose only briefly and remained below levels seen during past shocks.

“That experience shows today’s oil market is more flexible than in the past,” he said.

Looking ahead, Behrouzifar said a significant price increase in 2026 is unlikely unless there is an unexpected development in the global economy or a major geopolitical shift affecting large consuming countries.

Current Prices Still Economical for Producers

Behrouzifar said continued oil production indicates current prices remain economically viable for producers. If prices fell below production costs, sustained output would not be rational for many countries, he said.

Referring to previous periods of maximum pressure, including during the Trump administration, he said major producers — particularly in the Persian Gulf — have sought to avoid triggering shocks in the global oil market while maintaining political and security ties.

He said OPEC+ is expected to continue managing the market in 2026, but emphasized that leading members face considerations beyond oil. “Relations with the United States inevitably influence their decisions, and there appears to be no strong appetite for creating price tensions,” he said.

U.S. Output Reshapes Energy Dynamics

Behrouzifar pointed to rising U.S. oil production, noting that the country has shifted over the past decade from a major importer to one that largely meets its own needs and can even be considered a net exporter.

“This transformation has profoundly affected global energy equations,” he said, adding that U.S. energy security is no longer directly tied to the Persian Gulf and the Middle East, contributing to a marked change in Washington’s regional policies compared with 15 years ago.

Upstream Investment Decline a Long-Term Risk

Behrouzifar warned that declining or delayed investment in upstream oil and gas projects could pose a long-term threat to global energy security. While the impact may not be immediate, he said prolonged underinvestment could disrupt the supply-demand balance and eventually lead to sharp price increases.

He said major oil companies recognize that oil will remain an integral part of the global energy mix over the next five to 10 years and cannot realistically be eliminated from energy systems within the next decade or two. While renewable energy is expanding, the role of oil and gas in the global economy remains undeniable, he said.

Behrouzifar added that the oil market is unlikely to face supply shortages next year unless a major producer is hit by a serious geopolitical crisis. “If nothing unusual happens, we may see demand challenges, but not supply problems,” he said.

Energy Transit Security Remains Critical

He also stressed the importance of securing global energy transit routes, saying any uncertainty over key waterways would provoke an international reaction. China, for example, remains dependent on the Strait of Hormuz for its oil supplies, underscoring the continued geopolitical significance of energy corridors.

Asked about the main challenge facing the oil market in 2026, Behrouzifar said it will be maintaining balance between supply and demand amid relatively unattractive prices. This situation puts pressure on producers and may prompt some countries to raise output to protect market share.

Overall, he said oil prices are unlikely to move meaningfully higher than current levels in 2026 unless there is an unexpected shock or strong economic growth in major economies. “The oil market has shown it is better able to manage shocks than in the past,” he said.