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Oil prices tumbled on Wednesday, losing more than $2 a barrel after OPEC indicated that global supply could balance with demand in 2026 — a shift from its earlier projection of a deficit.

Brent crude settled $2.45 lower at $62.71 a barrel, down 3.8%, after rising 1.7% on Tuesday. 

WTI closed $2.55 lower at $58.49 a barrel, a 4.2% decline, following a 1.5% gain in the previous session.

In its latest monthly report, OPEC said global oil supply is expected to align with demand next year as the wider OPEC+ alliance continues to lift output. The forecast marks a significant revision from earlier expectations of a supply shortfall in 2026.

Adding to the reassessment, the International Energy Agency (IEA) projected in its World Energy Outlook that oil and gas demand could continue rising through 2050. The outlook contrasts with the agency’s earlier view that oil demand would peak this decade, reflecting a methodology now less dependent on governments’ pledged climate targets.

Analysts said expectations of a prolonged supply overhang have capped recent price rallies. OPEC+ has already agreed to pause additional output hikes in the first quarter of 2026, following the gradual unwinding of production cuts since August.

In the US, the House of Representatives approved a long-delayed spending bill to end the nation’s longest government shutdown. The reopening is expected to boost consumer sentiment and economic activity, offering some potential demand-side support for the oil market.

Written: Farid Muzaffar