The global oil market in 2025 defied the expectations of many analysts. Despite a series of geopolitical crises — from the wars in Ukraine and Gaza to tensions in the Red Sea and political uncertainty in the United States — oil prices did not experience the sharp rally many had predicted. At the start of last year, numerous analysts expected oil to reach $90 a barrel or higher. Instead, the market told a different story, driven largely by structural changes on the supply and demand sides.

A key factor was the growing role of the United States as the world’s largest oil producer, record shale output, the renewed strength of U.S. benchmark crude and a shift in the market’s traditional balance. At the same time, a sharp mismatch between OPEC and the International Energy Agency over demand growth estimates became a central point of analytical dispute, with media coverage of those reports directly affecting oil prices and the share values of energy companies.

OPEC-plus, despite sanctions on some of its key members, has experienced one of its most cohesive periods in recent years. The question, however, is how long that unity can last. Limited spare capacity, new investments by member states and the potential return of sanctioned producers have added new uncertainties to the outlook for 2026 and 2027.

In this context, Fereydoun Barkeshli, a senior energy expert, spoke with Shana about why the oil market surprised analysts in 2025 and what risks lie ahead in 2026.

A Market That Defied Expectations

Barkeshli said the oil market in 2025 was full of surprises. Prices started the year around $80 a barrel, and most analysts were preparing for $90 oil or even higher. Market participants focused heavily on macro and extra-structural factors, including geopolitical crises, the prospect of Donald Trump’s return to the White House and U.S. tariff policies, the Federal Reserve’s insistence on keeping interest rates low, and uncertainty over U.S.-European differences on the Ukraine war. The Gaza conflict and tensions in the Red Sea and Suez Canal were also ongoing.

What the market largely overlooked, he said, was that macro and geopolitical factors only drive price spikes when market structures allow them to do so. The major blind spot was U.S. shale oil production. The global oil market has undergone a fundamental shift: for the first time in 70 years, the United States has moved from being a major importer to a major exporter.

In 2025, U.S. oil production averaged 13.6 million barrels a day, the highest level ever recorded. The country also set records in liquefied petroleum gas and LNG production. As recently as 2022 and 2023, many analysts believed U.S. benchmark crude was losing its relevance. Instead, it has returned strongly and, in some cases, overshadowed Brent.

Despite record shale output, the United States remains a crude importer because shale oil is extremely light and many refineries cannot process it efficiently. As a result, shale must be blended with heavy and extra-heavy crude, much of which is produced by Venezuela. This is one reason the United States continues to need Venezuelan heavy crude.

Conflicting Data, Conflicting Narratives

Three institutions regularly publish global oil supply and demand data: OPEC in Vienna, the International Energy Agency in Paris and the U.S. Energy Information Administration in Washington. International analysts tend to focus primarily on OPEC and IEA reports.

Barkeshli said OPEC, which accounted for about 48% of global oil supply in 2025, considers itself the most reliable source on production and supply. On the demand side, however, the IEA acts as the main reporter, and its data are more open to interpretation because they reflect the priorities of major consuming countries, environmental goals and the Paris climate agreement.

OPEC estimated global oil demand growth in 2025 at 1.4 million barrels a day, while the IEA put the figure at 700,000 barrels a day. The prominence of IEA-based headlines intensified their impact on oil prices and energy stocks, often weighing on the market.

OPEC-Plus Unity — for Now

OPEC-plus formally took shape in late 2016, with Russia’s participation playing a key role in efforts to stabilize the market. Cooperation deepened after the COVID-19 pandemic in 2020, when global oil demand fell by about 10 million barrels a day.

In 2025, OPEC and its allies showed an unusually high level of solidarity. In 2023, OPEC-plus collectively removed 4.6 million barrels a day from the market to restore stability — a rare display of coordination among international organizations.

Barkeshli expects OPEC and its allies to stay the course in the short to medium term, but said longer-term cohesion will depend on global and regional conditions and structural changes in the world economy. About 20% of OPEC-plus oil supply — from Russia, Iran and Venezuela — remains under sanctions. Only Saudi Arabia and the United Arab Emirates currently have significant spare capacity.

On the demand side, China and India have sharply expanded refining capacity, turning refined products into major competitors with crude oil. China held about 1.247 billion barrels in oil storage in December 2025, making it a major market player. Europe, meanwhile, has seen declining oil consumption since 2015, with total demand around 11.5 million barrels a day. Taxes on petroleum products are a major revenue source for European governments, meaning lower imports can hurt public finances.

The Real Risks Ahead

Barkeshli said recent global crises have each pushed oil prices slightly higher, followed by pullbacks. The key question is why repeated crises have not produced sustained price shocks. He argues that geopolitical risks have already been priced in. Without them, Brent crude would likely be around $40 a barrel, meaning more than $10 of today’s price reflects geopolitical tensions.

Still, supply exceeds demand, with large volumes of oil waiting in onshore and offshore storage. Demand growth centers have underperformed: Europe’s consumption is shrinking, and China, India and Southeast Asia have used less oil than expected.

Looking ahead, Barkeshli said the main risk in 2026 will come from within OPEC-plus and a possible quota war. If peace is established in Ukraine, Russia could quickly redesign its market position and add up to 1 million barrels a day of production. The UAE could increase output by up to 1.3 million barrels a day, and Iraq — backed by major international oil companies — will also seek a larger share. Libya, Nigeria and several Central Asian countries are investing to raise production.

U.S. shale remains a key uncertainty. At prices below $55 to $60 a barrel, shale may struggle to compete and could retreat from the market. If a quota war erupts within OPEC-plus, prices would fall sharply. Even without such a conflict, Barkeshli expects oil prices to remain in the $50 to $60 range through November and December 2026, around the time of U.S. midterm elections. More stable prices, he said, are unlikely before 2027.