By: ThinkBusiness Africa
Crude oil prices rose sharply on Monday, rebounding from a steep 4% loss in the prior week. The rebound was primarily driven by an immediate spike in the U.S-Venezuela escalating tension, which temporarily eclipsed mounting concerns over a long-term structural oversupply predicted by a deeply bearish new research note from J.P. Morgan.
Both global oil benchmarks West Texas Intermediate (WTI) and Brent crude futures climbed on Monday morning, Brent crude futures were up 34 cents, or 0.54%, at $61.45 a barrel, and U.S. West Texas Intermediate crude was at $57.75 a barrel, up 31 cents, or 0.54%.
This bounce came as the U.S continues to pressure Venezuela president Nicolas Madura. Last week Washington seized a tanker off Venezuela’s coast, accusing it of transporting sanctioned oil. And dozens of people have been killed in attacks on boats alleged to have been carrying drugs.
Venezuela’s oil exports have fallen sharply since the United States seized the tanker earlier last week, and imposed fresh sanctions on shipping companies and vessels doing business with the Latin American oil producer, leaving tankers loaded with over 11 million barrels of oil stuck in the water.
This, and the ongoing drone strikes by Ukraine on Russian oil infrastructure, keeping short-term supply anxiety high, contradicting JP Morgan’s oversupply predictions.
Traders were quick to price in the risk to immediate global supply chains, pushing prices up despite the shadow cast by one of the most bearish institutional forecasts in recent memory.
Reports released on Saturday from J.P. Morgan Commodities Research warned that the global oil surplus is not only expected to widen in 2026 but could extend further, driven by non-OPEC+ supply expanding at an estimated three times the rate of demand growth through 2026.
A potential supply surplus of nearly 3 million barrels per day (bpd) by 2026-2027 if the OPEC+ alliance maintains its current production stance. JP Morgan warned.
The firm forecasted that this persistent glut could drive Brent crude prices down to an average of $58 per barrel in 2026 and potentially plunge into the $30 range by the end of FY27 without significant, coordinated production cuts.
The supply growth is overwhelmingly driven by non-OPEC+ producers, particularly the United States (shale), Brazil, and Guyana, with robust offshore projects providing exceptional clarity on future output.
The J.P. Morgan forecast places intense pressure on the Organization of the Petroleum Exporting Countries and its allies (OPEC+). The group has implemented deep production cuts to stabilize the market in previous years, but the speed and scale of non-OPEC+ expansion are now challenging its market control.
