Analysts at CardinalStone have projected that global crude oil prices will average about $55 per barrel in 2026, citing persistent oversupply and weakening global demand as major factors likely to weigh on the market. The outlook was outlined in the firm’s 2026 economic report titled “Indicators Align for Sustained Macro Gains,” released on January 6, 2026.
According to the report, while oil-producing countries such as Nigeria are expected to see improved production levels, broader global dynamics suggest that supply will continue to outpace demand, limiting any significant upward movement in prices. CardinalStone estimates that oil prices will average approximately $55.08 per barrel over the year, reflecting cautious sentiment across energy markets.
Nigeria’s production outlook improves
Despite the subdued global price environment, Nigeria’s crude oil production is expected to increase in 2026. CardinalStone projects that the country’s output will rise to about 1.75 million barrels per day (mb/d), up from an estimated 1.67 mb/d in 2025. The anticipated increase is attributed largely to a sustained reduction in crude oil losses, which have reportedly fallen to their lowest levels since 2009.
The report also points to increased investment activity among domestic energy companies as a positive driver of production growth. Indigenous producers such as SEPLAT and ARADEL are expected to raise capital expenditure, supported by the completion of the Mobil Producing Nigeria Unlimited (MPNU) transaction and the acquisition of select Shell assets through the Renaissance Consortium. These developments are expected to strengthen Nigeria’s production capacity and improve operational efficiency within the sector.
However, CardinalStone cautioned that improved local output alone may not be sufficient to counteract the broader pressures affecting global oil prices.
Global oversupply remains a key challenge
At the global level, concerns about excess supply continue to dominate market expectations. Data from the International Energy Agency (IEA) indicate that oil supply is projected to exceed demand by about 3.84 million barrels per day in 2026. Although this represents a slight reduction from the 4.09 million bpd surplus projected in November, it still amounts to nearly four percent of total global demand.
Much of the surplus has been driven by output increases from members of the OPEC+ alliance. In 2025, countries including Saudi Arabia, Russia, the United Arab Emirates, Kazakhstan, Kuwait, Iraq, Algeria, and Oman collectively added an estimated 2.9 million barrels per day to global supply. This expansion has contributed significantly to the imbalance between supply and demand.
In response, OPEC+ has opted to pause further output increases during the first quarter of 2026 in an effort to stabilise prices. However, market data suggest that the move has yet to produce a meaningful impact on price levels, with traders remaining cautious amid lingering concerns about demand growth.
Recent price performance and market sentiment
Brent Crude, the global oil benchmark, ended 2025 on a notably weak note. Prices declined by more than 18 percent over the year, falling from around $74 per barrel at the beginning of 2025 to approximately $60 per barrel by year-end.
Although there was a temporary recovery between May and July, when prices climbed above $71 per barrel, the rally proved short-lived. From August through December, bearish sentiment returned, driven largely by oversupply fears and uncertainty surrounding global economic growth. As of January 6, 2026, Brent Crude has been trading within a narrow range of about $60.9 to $61 per barrel, struggling to break above the $62 level in the near term.
Implications for Nigeria and global markets
The persistence of excess supply and subdued demand is expected to cap oil price gains in 2026, posing potential revenue challenges for major oil-producing countries, including Nigeria. While increased investment and asset acquisitions by firms such as SEPLAT and ARADEL could help sustain output and support investor confidence in the domestic sector, earnings may remain under pressure if prices fail to recover meaningfully.
Globally, market participants are expected to closely monitor developments that could signal a rebalancing of supply and demand, including changes in OPEC+ policy, geopolitical developments, and shifts in global consumption patterns. Any such changes could have significant implications for oil prices and investment strategies across the energy sector.
For now, CardinalStone’s outlook suggests a cautious year ahead for oil markets, with limited upside potential amid continued structural challenges.
Emmanuel Bassey is a Financial Expert that has worked in the Banking and Finance Industry for over 15+ years across different banks in Nigeria
