JPMorgan: Severe oversupply could push oil prices down to $30 in 2027

J.P. Morgan’s latest forecast shows that, due to severe market oversupply, the international crude oil benchmark Brent may fall to the $30-per-barrel range by 2027. This long-term outlook highlights the tremendous pressure of supply-demand imbalance facing the global energy market.

Meanwhile, Goldman Sachs has issued a report advising investors to short crude oil immediately. The bank expects that, due to a daily oversupply of 2 million barrels, the average price of U.S. WTI crude will drop to $53 per barrel in 2026. Since the beginning of this year, Brent crude prices have accumulated a decline of 14%, with early trading on Monday holding near $62.59 per barrel.

Major investment banks’ analysis points out that large-scale supply from OPEC+ and non-OPEC producers in the Americas continues to flood the market. In addition, potential easing of geopolitical tensions has further intensified downward pressure on prices. As the U.S. and Ukraine make progress in peace talks in Geneva, the market expects that a peace agreement could lead to a relaxation of sanctions and restrictions on Russia, further driving energy prices lower.

Although some analysts and investment banks currently do not believe oil prices will fall below $40 per barrel, the market generally expects ongoing downside risks for oil prices in the short and medium term until this “huge wave of supply” is fully absorbed.

Goldman Sachs recommends “shorting” immediately

According to Daan Struyven, co-head of Global Commodity Research at Goldman Sachs, who spoke to CNBC last week, oil prices are on a further decline trajectory and investors should “short crude oil now.”

Goldman Sachs expects that, with the market facing a daily oversupply of 2 million barrels next year, oil prices will fall even further from current levels. The bank forecasts that by 2026, the average price of WTI crude will be $53 per barrel. This prediction is based on expectations of ongoing strong supply growth from OPEC+ countries and non-OPEC producers in the Americas, with this oversupply situation expected to dominate market trends for the coming years.

Supply-demand rebalancing timetable

Regarding when the market can absorb the current oversupply, major institutions have given different timetables. According to a forecast published by J.P. Morgan on X (formerly Twitter), Brent crude prices could drop to the $30 range by 2027 as oversupply may overwhelm the market.

In contrast, Goldman Sachs believes the market could achieve rebalancing by 2027. Daan Struyven noted that 2026 will be the “last wave” of large-scale oil supply that the market must absorb. This means that after enduring the supply shock from oil producers across both sides of the Atlantic, the oil market’s supply-demand structure may gradually return to normal in 2027. Nevertheless, analysts widely acknowledge that, even if prices don’t dip below $40, the downward trend in oil prices remains obvious in the near term.

Geopolitical easing adds pressure to oil prices

Besides supply-demand fundamentals, changes in geopolitical factors are also influencing market sentiment. The U.S. and Ukraine held what both sides called “productive” talks in Geneva on Sunday, agreeing to continue working intensively on the “enhanced” peace plan proposed by the U.S. last week.

Analysts note that easing tensions in Ukraine could have a negative impact on energy prices. If a peace agreement is reached, some sanctions and restrictions against Russia may be canceled or relaxed, allowing more Russian energy supply to re-enter the global market smoothly, further increasing supply pressure on top of already existing oversupply. The oil market is closely watching the latest progress in these negotiations.

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