Oil prices could see further gains in 2026 as geopolitical risks continue to fuel volatility, HSBC said, although the bank added that market fundamentals should cap rallies and keep prices anchored in the mid-$60s range.
As a result, HSBC kept its forecast for Brent crude at $65 a barrel for 2026 and beyond, despite elevated tensions in several major producing regions.
The bank sees the oil market caught between persistent geopolitical shocks and a sizable supply surplus. Analysts led by Kim Fustier estimate a global supply-demand imbalance of about 2.8 million barrels per day (bpd) in 2026—the largest since the COVID-19 pandemic—with the surplus peaking above 3 million bpd in the first half of the year.
While the expected oversupply has yet to show up clearly in onshore inventories, oil held on the water has climbed to multi-year highs, leaving prices more prone to moves driven by geopolitical headlines than by underlying supply-demand fundamentals.
HSBC highlights Iran, Russia, and Venezuela as the key “known unknowns” shaping near-term price action. Rising tensions between the United States and Iran, as well as unrest inside Iran, have pushed prices up by about 10% since early January, but analysts believe such rallies are likely to reverse if oil flows remain uninterrupted.
They argue that “price spikes remain contained and fundamentals should reassert themselves over time if supply is not disrupted,” noting that recent conflicts in the Middle East have not damaged core oil infrastructure.
Russia, meanwhile, poses risks in both directions. An intensification of Ukrainian attacks and stricter enforcement of sanctions have increased near-term supply vulnerability, but analysts say a potential peace deal between Russia and Ukraine could ultimately weigh on prices as markets begin to price in sanctions relief.
Venezuela, by contrast, is seen as a less immediate disruption risk, with U.S. policy focused on keeping oil flowing following the detention of President Nicolás Maduro, although longer-term production growth remains uncertain.
OPEC+ is expected to add to the oversupply later in the year as it continues to unwind production cuts, particularly in the second and third quarters.
HSBC notes that the group has imported less than in previous cycles and has become more predictable, arguing that it is likely to underestimate the scale of the market’s oversupply as additional barrels return.
Despite the size of the projected surplus, the analysts caution against excessive pessimism. Moderate oil prices reduce U.S. sensitivity to higher crude prices, giving Washington greater scope for assertive foreign policy that can periodically lift prices, while China’s continued strategic stockpiling also provides support.
