Oil Prices Seen Range-Bound Amid Weak Demand Growth and Supply Overhang: Emkay Wealth Management
Emkay Wealth Management Ltd, the wealth management arm of Emkay Global Financial Services in its latest navigator report on brent cited that, the global crude oil prices may witness a marginal uptick in the near term amid ongoing geopolitical and supply-side uncertainties, but the broader outlook for Brent crude remains largely range-bound, with limited scope for a sustained rally, according to industry insights.
Brent crude has been trading at relatively subdued levels for over a year, largely hovering in the range of USD 60–65 per barrel, despite production curbs announced by OPEC and its allies. The lack of any meaningful price breakout has been driven by a persistent imbalance between demand growth and emerging global supply, with demand forecasts continuing to lag incremental production additions.
While recent global uncertainties may lend some short-term support to oil prices, any upward movement is expected to be gradual and capped, with Brent unlikely to sustain levels beyond USD 68–70 per barrel. Market fundamentals continue to point towards structural challenges, including slower global economic growth and cautious consumption patterns across major economies.
Prolonged low oil prices have also led to a significant curtailment in capital expenditure plans across the energy sector. Major oil and gas companies have slowed expansion and deferred fresh investments, prioritising liquidity preservation and balance sheet stability amid heightened global uncertainty. This disciplined approach to spending has helped companies maintain profitability but has also reduced the pace of new capacity additions.
On the supply front, oil output from key producers such as Venezuela and Iran had normalised in recent months, with Iran’s production reportedly touching pre-sanctions levels. A large portion of this output had been directed towards Asian markets, particularly China. However, fresh political developments and evolving geopolitical dynamics have reintroduced uncertainty around the continuity and routing of these supplies to global markets.
That said, industry participants believe that these disruptions may be temporary, with the possibility of sanctions and trade restrictions being lifted in the future. Importing nations are increasingly cautious about sourcing crude from geopolitically sensitive regions, factoring in risks related to shipping, insurance and potential vessel seizures, which could influence short-term trade flows.
Despite these uncertainties, the prospects of a sustained surge in crude prices appear limited. Structural factors, including the economics of oil production and inventory dynamics, continue to weigh on the medium- to long-term outlook. According to forecasts by the US Energy Information Administration, global oil inventories are expected to keep rising through 2026, exerting downward pressure on prices in the coming months. The agency has projected an average Brent crude price of around USD 55 per barrel in 2026, underscoring expectations of continued oversupply.
Dr. Joseph Thomas, Head of Research, Emkay Wealth Management said, “While geopolitical developments could support oil prices in the very short term, the underlying fundamentals suggest that any rally will be limited. With demand growth remaining muted and global inventories expected to rise further, Brent crude is likely to stay range-bound over the medium term. Energy companies and market participants will need to navigate this phase with capital discipline and a focus on operational efficiency rather than relying on price-led growth.”
Overall, while near-term volatility cannot be ruled out, market participants are increasingly aligned on the view that oil prices are unlikely to see a prolonged upswing unless there is a material and sustained shift in global demand dynamics.
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