Oversupply is depressing oil prices, but factors like sanctions on Russian oil companies and Xi and Trump are preventing the price from reaching $60 a barrel. A new World Bank forecast suggests that will be the average price in 2026.
Since the oil price hit its lowest point since early May on October 20th at $61,01 per barrel, oil had been on the rise again until October 26th, reaching a level of $66,40 per barrel. At the time of writing (Thursday morning, October 30th), however, the price has fallen slightly to $64,60 per barrel. The price remains lower than the average this year. Prospects of oversupply continue to depress the price. The OPEC+ countries will likely decide on November 2nd to increase production slightly again, as they have done in recent months, after earlier production cuts.
Other factors are keeping oil prices from falling below $60. US President Donald Trump and his Chinese counterpart Xi Jinping have reached a closer agreement in South Korea, including on import tariffs, which Trump says will be reduced from 57% to 47% for China. Whether trade tensions between the two countries are now definitively over remains uncertain.
Sanctions on Russian oil are also supporting prices. The United States and the United Kingdom have imposed sanctions on Russia's two largest oil companies, Rosneft and Lukoil. This is intended to make it difficult for the Kremlin to generate revenue for the war in Ukraine. The European Union also imposed new sanctions, but Lukoil is exempt. Analysts believe the EU is still too dependent on them. Rosneft and Gazpromneft are, however, on the EU's sanctions list.
According to various media outlets, Rosneft and Lukoil together account for roughly half of Russia's daily 4 million barrels of oil exports. India and China, as major buyers of Russian oil, will likely be hit hardest. There are 260 Lukoil gas stations in the Benelux region, 70 of which are in the Netherlands. The company has announced it will sell its foreign assets.
World Bank
Although the oil price remains well above $60 per barrel for now due to supportive factors, this is not expected to remain the case for long. According to a new World Bank forecast, the Brent crude price is expected to average $68 per barrel this year (compared to $81 per barrel in 2024), falling to an average of $60 per barrel in 2026.
The forecast is based on slower growth in oil consumption due to very weak demand growth in China, increasing use of electric and hybrid vehicles, and a further increase in global oil supply. The oversupply will have increased significantly by 2025 and is expected to rise next year to 65% above its most recent peak in 2000, according to the World Bank.
Gas
The World Bank also has a forecast for natural gas prices, which vary greatly across the continent. As for US liquefied natural gas (LNG), prices are estimated to have risen by 2025. 60% increase, mainly due to a sharp increase in LNG imports from Europe. The World Bank predicts that the US gas price will rise by another 11% in 2026, before remaining stable in 2027.
The European benchmark gas price is expected to rise by 10% in 2025, then fall by around 11% in 2026 and another 9% in 2027, as the European Union's plans to phase out its purchases of natural gas from Russia are implemented, according to the World Bank. Weak global economic growth, sufficient supply, and the increased use of renewable energy sources also play a role in gas pricing.
At the time of writing, the gas price on the TTF futures market stands at €31,73 per MWh. While this is double what was paid in October 2020, it's relatively low compared to the skyrocketing prices following Russia's invasion of Ukraine.
Until Sunday, there will be less gas demand for heating than last week, and roughly the same afterward, according to the National Energy Dashboard's energy forecast. This week, the fill level of European gas reserves has not increased and remains at 83%, according to data from Gas Infrastructure Europe (last year it was 95%). Dutch gas reserves are still rising slightly and are now on track to reach 73% (last year 89%).
Diesel price rises
The diesel price on October 29th was €128,05 per 100 liters (from 4.000 liters). A week and a half ago, it was €122,15, a 4,8% increase.
Electricity
Both wind and solar energy generated more this week than the average for the past three years, according to the National Energy Dashboard. The daily average on the European Power Exchange (Epex Spot) spot electricity market ranged from €15,33 per MWh on October 25 to €89,42 on October 29.