Oil prices are set for a slide back into the mid to high $50s this year as swelling supplies collide with sluggish global growth, according to analysts at Morgan Stanley.
The Wall Street bank warned of “another period of oil price softness ahead”, pointing to a sharp increase in global output. Supply growth of around 2.4 million barrels per day between the final months of 2024 and 2025 has been driven by rising production in Brazil, Guyana, Argentina and the United States.
At the same time, producers within the OPEC alliance have added a further 1.6 million barrels per day, leaving what Morgan Stanley described as “both sources of supply entering 2026 at a very strong level”. The bank estimates the global surplus in the first half of the year could reach as much as 3 million barrels per day.
Demand, by contrast, has been underwhelming. Global oil consumption rose by about 900,000 barrels per day last year, well below the long-term trend of roughly 1.2 million barrels per day, reinforcing the case for downward pressure on prices.
The analysis does not factor in recent political upheaval in Venezuela, where the capture of Nicolás Maduro has injected fresh uncertainty into the market and briefly pushed prices higher on fears of short-term supply disruption.
Even so, any rally may prove short-lived. Brent crude jumped 1.7% on Monday and was last trading modestly higher near $62 a barrel, while US benchmark prices hovered just above $58—levels that Morgan Stanley suggests may be difficult to sustain as the year unfolds.
