Geopolitics to continue steering oil markets in 2026: S&P Global

Oil markets are likely to remain influenced by geopolitics next year, with policies and prices closely intertwined, continuing to have a "really complicated relationship", Dave Ernsberger co-president, S&P Global Commodity Insights told ET.

"There's a lot of production available that could come to the market from OPEC and OPEC plus but if it came to the market in full volume, it would be too much," he said. "We currently forecast from S&P Global Commodity Insights that the price will be closer to $60 a barrel by the end of next year. And perhaps as low as $55 a barrel." The risk in that forecast is to the upside, he added.

Russia is the third biggest supplier of oil in the world and if there is a significant movement to take that oil out of the market through some combination of policy and sanction activity then that has the ability to turn the dynamic "kind of upside down", he said.


There's a very complicated chess game going on around the supply of oil in the global market and many people are playing that at the same time whereas there's only one board, he said.

Elevated tariffs by any major global economy, in this case the US, create an economic incentive for countries, including India, to prioritise economic independence over interdependence, even if it means paying a premium, Ernsberger said.

From an economic perspective, the global economy is now entering an era where cost and value are not the biggest factors in choosing how to invest in your economy, which is the most interesting outcome of the tariff imposition, he said.

Historical high level of tariffs hasn't slowed down the US economy or had a massive impact on the global economy either which is a surprise considering the conventional expectation was otherwise, he said.

The other learning is that China is not as dependent on the US as it was thought.

However, since the tariff announced in February, the global supply chain hasn't been affected as much as expected, he added. One of the two reasons is tariffs keep changing, which makes it difficult to make a medium-term decision, he said. The second is that it's really hard to measure where something really comes from.

Energy Transition

The way it plays out from this point is the global economy is not going to be driven by an energy transition but by an energy addition, Ernsberger said.

"The demand for energy will continue to be insatiable for two generations to come. The opportunity is to meet that demand with newer, cleaner, more modern forms of energy, which will mean we will still need the energy forms that we have today for several decades to come if no longer." The question of how to add energy with novel supply sources is more important than discussions on replacing old with new.

Inside the US there is still an appetite to invest in decarbonisation projects, not because of policy requirements but because it's economically valuable to take those steps, he said.

India's green ambitions

There is a lot of talk about the marginal cost of solar power in India which is world-beating, and which means that follows on from that would be globally competitive, he said talking about the green hydrogen market in India.

India is in a great position to drive forward the hydrogen market, whatever colour it chooses, and bring plenty of supply to the market at increasingly competitive prices.

As for the demand for a clean form of hydrogen, he said, while there are buyers in the global market, it's the complexity of reaching the demand which is the issue, but the discussions around it are gaining momentum.

The chess game

If somehow the Russian supplies were reduced because India was buying less, that Russian oil would come off the market, and that would make space for some of the extra barrels from OPEC and OPEC Plus.

The US would like to continue supplying oil, generally speaking, he added.