The Great Energy Shift of 2026: Who Profits from Surplus Supply, Who Bears the Pressure? Refining Products Become Key

In 2025, Brent crude oil fell nearly 20% from its early-year high, closing the year at around $60 per barrel. This is not an isolated event but a prelude to the massive changes in the energy market in 2026. According to analysis by Reuters and IEA data, the global energy landscape is undergoing a structural reshuffle—surging supply, capacity explosions, regional differentiation—that will profoundly impact oil and gas prices and investment opportunities.

Refining products become winners: diesel margins rise against the trend by 30%

A seemingly contradictory phenomenon is occurring. Crude oil faces severe oversupply, yet diesel remains relatively strong. This stems from structural bottlenecks on the supply side: Russian refineries damaged by drone attacks, EU sanctions on Russian crude-derived fuels, and limited new refining capacity worldwide.

In 2025, European diesel margins have increased by 30%, far exceeding Brent crude’s 20% decline. This divergence is expected to continue into 2026, even if geopolitical conflicts ease, as refining supply bottlenecks will continue to support the relative prices of diesel and gasoline. For investors, this suggests that refining assets may serve as defensive allocations in a declining oil price environment.

Oil oversupply of 3.85 million barrels/day: 2026 destined to be the “inventory year”

IEA forecasts a global oil oversupply of 3.85 million barrels/day in 2026, accounting for about 4% of global demand. This is driven by multiple factors:

Continued supply expansion — US, Canada, Brazil, and Guyana are hitting record high outputs; OPEC+ gradually easing production cuts, with full resumption expected in the first half. China’s strategic reserves replenishment (about 500,000 barrels per day) and crude oil inventories at sea reaching their highest since April 2020 will act as price downside catalysts.

Price range emerging — Absent major geopolitical events, Brent crude could stay in a $55-65 range long-term in 2026. The current $60 per barrel level is approaching the lower bound of this range, making repeated tests of support highly probable.

OPEC believes the market is roughly balanced, but their forecast diverges sharply from IEA’s, representing one of the most significant sources of recent market volatility.

LNG export capacity explosion: US contributes 45%, price competition intensifies

Between 2025 and 2030, global LNG export capacity will increase by 300 billion cubic meters per year, a 50% growth. The US accounts for 45% of this new capacity, with Australia, Qatar, Mozambique, and others also expanding.

Europe, which previously saw demand surge to replace Russian gas, will face an inevitable oversupply that will depress spot prices in Asia and Europe. LNG’s competitiveness against oil and coal will significantly improve, squeezing profit margins for natural gas producers, some of whom may face reduced output or project delays. Consumers will benefit from lower energy costs.

Western oil and gas giants diverge: capital expenditure cuts of 10%, M&A entering a sluggish phase

Western giants like Chevron, ExxonMobil, and TotalEnergies plan to cut capital expenditures by about 10% in 2026, driven by short-term price pressures and shareholder return demands. Meanwhile, Middle Eastern oil producers are actively expanding upstream investments.

The low oil price environment may even trigger a wave of mergers and acquisitions. Western giants, with strong balance sheets, could acquire low-cost assets at undervalued prices, preparing for capacity recovery toward the late 2020s and early 2030s. Capital allocation choices during this cycle will shape the supply landscape for the next decade.

Renewable energy growth slows but does not stop: solar, wind, and battery storage face new challenges

IEA has revised down its 2030 renewable energy installation forecast to 248 GW (from a base of 4,600 GW, with solar accounting for 80%), mainly due to policy weakening in the US and China. But this is not a sign of decline, rather a slowdown in growth.

Electricity demand is expected to continue growing at 4% annually through 2027, driven mainly by data centers, electrification of the economy, and AI computing booms. Costs for solar, wind, and battery storage continue to decline, but during peak midday hours, oversupply phenomena will intensify, leading to more volatile electricity prices and testing energy storage and grid dispatch capabilities.

Investor action list: structural imbalance outweighs geopolitical risks

The decisive factors in the 2026 energy market will not be geopolitical (US-China trade, Russia-Ukraine conflict, Middle East tensions, though present, are unlikely to be the main drivers), but rather the structural supply-demand imbalance.

Key indicators to monitor: IEA and OPEC forecast divergence, OECD inventory changes, OPEC+ meeting decisions, renewable energy policy developments.

Allocation suggestions: Short-term crude oil may experience high volatility within a range; long-term, assess whether supply growth will continue to suppress demand recovery. Refining products remain relatively strong and can be viewed as defensive assets in a declining oil price environment. LNG prices are on a clear downward trend; focus on opportunities along the cost curve.

Structural oversupply will dominate the long-term trend, with time favoring the supply side.