Oil Markets: Cutting Forecasts

HSBC has cut its Brent crude price forecasts for 2026 and 2027, citing an accelerated rebalancing of oil markets and a structural shift toward supply surplus. The report highlights the return of Gulf oil exports and permanent demand destruction in China as key factors.

Key Takeaways

• 1.HSBC cut their Brent forecast to USD80/b for 2026 and USD65/b for 2027.
• 2.A cyclical surplus of 3.7mbd is expected by 2027, driven by supply growth and a permanent reduction in China's demand.
• 3.The market is currently experiencing a 'mini-glut' as stranded Gulf barrels return, expected to revert to a surplus in 4Q26.

Table of Contents

• Cutting forecasts: Mini-glut now, surplus later
• Recap: how we got here
• Physical market weakens as Hormuz traffic gradually recovers
• Why 2027 oversupply now looks worse than before Hormuz
• UAE's exit from OPEC+
• Non-Gulf growth: all about the Americas
• Gulf bypass infrastructure becoming structural
• OPEC strategy: defend price or market share?
• Demand: a structurally smaller China
• The China ceiling
• Gulf upstream recovery is going well
• Inventory refill: partial offset, not enough to absorb surplus
• Refining: where the real tightness lies
• HSBC global oil supply & demand balances

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