Oil Price and Gasoline Price Forecasts
Oil and Gasoline prices were expected to fall in 2026, primarily due to a weaker global economy and a rising flood of oil supply from non-OPEC+ producing countries.
As we know in March, those forecasts flew out the window as the US/Israel/Iran war has curtailed production globally. And Iran’s attack on neighboring Arab nations oil production facilities is driving up oil prices significantly.
Headlines Drive Oil Price up and Then Drive it Down
Both Iran and the US takes turns on closing the straight of Hormuz, (20% of the world’s petroleum passes through it) which has a sizable effect on supply and thus pricing. This is a news event driven market as each side puts considerable influence on the supply side picture. Iran is winning the battle, as the US can’t protect ships passing through the straight. That fact means low prices will temporary until the regime is defeated or agrees to withdraw.
Tasnim news agency, reported that Iran’s security council cited the U.S. blockade as the reason for the Strait’s closure, and that Tehran will “regard [the blockade] as a breach of the cease-fire and will prevent the conditional and limited reopening of the strait of Hormuz.” — in a report from Time Magazine.
Oil dropped to $82 on Friday, and with the renewed conflict, they’ll likely jump well above $90 this week if Iran digs its heels in (Trump stated that new bombing might be likely). Iran’s options and strength are running out. Still, investors are wondering about the price this week, whether to buy this dip, and about the 3 month summer outlook, and what effect limited oil supply will create across the US summer season. Everything from transport to manufacturing to travel will be affected.
Oil stocks have enjoyed a phenomenal run, and even climate agenda investors may have jumped on the bandwagon.
Investors in the stock market are ignoring the price of oil and gasoline, believing that President Trump is going to win this war and collapse the Iran regime’s power to harm. The US is finding the remaining revolutionary guard a difficult challenge, as they are able to block the straight of Hormuz.
If you’re considering buying oil stocks, you’ll want to get your timing right. It’s not enough to know that oil demand will grow as the world’s economy begins rolling again. The US is positioned to benefit most economically from the new era of growth featuring and driven by AI and cheap energy.
Yet the price of oil is being hampered deliberately by Iran as a military weapon. President Trump is winning the war battles, yet the regime is buying enough time to regroup and negotiate with Russia and China. At last news, Iran appears very weak, and this would affect perceptions of oil buyers and economists. With Iran out of the way, expect a small glut of oil to hit the markets via the Hormuz, which means we could see much lower prices down into the 70’s in mid summer. It will help the summer travel season.
What is Driving the Price of Oil Right Now?
1) Strait of Hormuz Transport Bottleneck
Roughly 20% of global oil flows through the straight, enough to seriously increase the price of crude. The inconsistency of supply is sufficient to threaten oil traders. Prices react one way or the other by up to 15%. That’s a war risk premium. The result is rising oil stocks.
2) War risk premium (this is huge right now)
Even if oil is physically flowing, markets price in:
- Risk of sudden escalation
- Tanker attacks / insurance spikes
- Infrastructure damage
The U.S. EIA explicitly believes a “risk premium” will remain baked into oil prices for months. Supply and price isn’t an easy thing to resolve.
3) Physical Supply Damage & Disruption
Gulf production/logistics are disrupted by up to ~10 million bpd (partial + precautionary cuts) with some production destroyed, shut in, or even permanently gone. Thus prices may not fall even when political tensions ease.
4) Demand Destruction Begins
IEA now expects demand to shrink slightly in 2026 due to high prices. It’s affecting the travel industry with airlines cutting flights, consumers pulling back on bookings, and new travel plans being made. This is the only downward factor now.
5) Market Psychology (massive driver right now)
Oil is trading on headlines, not fundamentals. Uncertainty drives caution in buying oil at higher prices. It’s a volatile market that only sophisticated traders enjoy.
In January, the price of WTI oil was stable at $78 to $85 a barrel, climbing to $85 to $95 during February, and $90 to $105 in March, and $95 to $140 in April, resting down at $82 on Friday. It’s a certainty that the price will be higher on Monday morning. The summer forecast is for higher oil prices given production and transport constraints that will persist.
Oil Stocks Last Week
Here’s a list of the top price performers last week.
Best Oil Stocks to Buy Now (with Low Middle East Exposure (Americas-Focused)
- ExxonMobil (XOM): Strong upstream portfolio with over 50% of production from high-return, low-cost assets in the Guyana and Permian Basin, insulating it from Middle East turmoil.
- Chevron (CVX): Key assets in the Permian Basin and Guyana, coupled with expansion into Venezuela, allow them to secure barrels away from the Strait of Hormuz.
- Devon Energy (DVN): An independent U.S. producer focused primarily on the contiguous United States, offering high correlation to oil prices without regional exposure risks.
- Canadian Natural Resources (CNQ) & Suncor Energy (SU): Canada-based giants that provide a safe haven for investors seeking oil exposure with zero Middle East supply-chain risk.
- Magnolia Oil & Gas Corporation (MGY): An independent upstream company operating within the United States, noted for its high-margin assets.
Will an Oil Surplus Become Reality Later this Year?
President Trump is expressing a firm commitment to grow the world’s supply of oil, including freeing up Venezuela’s oil output. That flow however may irritate OPEC+ who may decide to pull back on output, thus providing support for $60 barrel oil. If Trump persists, OPEC+ could be faced with a crisis, with cartel members at some point breaking with their agreement on limiting supply.
EIA believes there will be a slight decrease in US production this year.
Goldman Sach’s Oil Forecast
Goldman Sachs analysts predict prices will recover in 2027, perhaps making 2026 a buy opportunity for oil stocks. See more on investing in the best oil stocks including Canadian oil stocks. Evaluate whether oil stocks are a good investment.
With respect to oil supply, IEA reported that global observed inventories rose to four-year highs in October, at 8 030 mb. Stock builds averaged 1.2 mb/d during the first ten months of the year. Near-record oil on water, soft crude fundamentals and low volatility pinned Brent crude prices near four-year lows around $63/bbl despite tightening sanctions and strong diesel cracks.
In IEA’s January 13th press release, it states: “After reaching an annual record of 13.6 million b/d in 2025, we forecast U.S. crude oil production will decrease in the forecast, declining by less than 1% in 2026 and by 2% in 2027. With sustained lower crude oil prices, we expect crude oil production will decrease as the slowdown in drilling activity will outpace increases in drilling productivity. The West Texas Intermediate price averages $52/b in 2026 and $50/b in 2027 in our forecast, down from $65/b in 2025.
That 2027 forecast makes investing in oil stocks a risky proposition, if the US and global economy fail to grow and consume oil and gasoline output. What EIA has difficulty with is understanding the role of politicians and the power of Donald Trump.
Additionally, oil producers will likely cut back on drilling and production given the production glut and lower expected oil prices.
Perhaps most meaningful for oil stock investors is the possible collapse of the Iranian regime, leading to the lifting of US sanctions on Iran’s massive oil production potential. The opportunity of Venezuelan oil is a mystery at this point, although President Trump stated that 50 million barrels are currently being released. At some point this winter, that glut should reduce oil prices and gasoline prices.
US crude production hit a record high of 13.6 million b/d last July, and it is expected to hold nearly steady in the coming year according to EIA.
Next Week’s Gas Prices
Patrick De Haan, Head of Petroleum Analysis at GasBuddy, said in the report that they project the US average price of gas will decrease to $2.97 per gallon in 2026, making this year the fourth consecutive annual decline and the lowest average since 2020. De Haan said, “This continued decrease reflects the unwinding of post-pandemic market distortions, expanding global refining capacity, and more stable supply chains… While the drop from 2025 is modest compared to previous years, it underscores a meaningful shift toward greater overall market stability.”
The Problem With China and India
As China’s economy warms back up this summer, oil demand is stronger than anticipated and they’re getting theirs from Russia. That won’t sit well with OPEC as well as US/Europe who want to block and punish Putin for his attacks on the Ukraine. As Ukraine’s defense strengthens, the conflict with Putin will be intense. The US will be forced to put big pressure on India and China to stop the illegal imports or face steep sanctions. That could jump the price of oil considerably.
Current Wholesale Gasoline Prices around the World
Is it fair that some nations pay ridiculously low gasoline prices? Or are they just intelligent? globalpetrolprices.com chart shows the truth about gasoline prices across the globe, with oil rich nations enjoying very low prices (except USA and Canada).
What is the Long Term Outlook for Oil Price?
In this graphic from Knoema, we see the long term price will continue to grow, and we’re already $50 a barrel up on this model.
Oil Price History Chart
We’ve been in the $100 range before in 2011 to 2014. Even though the price of oil has grown fast and looks on a trajectory much higher than before, oil stocks have not risen to their previous highs. One stock in particular is at only 2% of it’s former peak.
Best Oil Stocks Today
While the larger oil companies such as Exxon, Chevron and Phillips get the most attention, stocks such as FANG (Diamondback Energy) and smaller oil companies are worth a look. The key is with those with less exposure to Middle eastern and central/south American exposure. Oilfield and sources within the US are golden, while Canadian oil companies may offer exceptional returns.
Should You Buy Oil Stocks?
If you’re investing for the 1 year to 5 year term, buying oil stocks has to be a brilliant purchase. After this brief but pathetic move to suppress oil prices, they will rise with a vengeance this winter and spring. The US may only have 5 years of oil reserves left, and that’s counting fracked oil reserves, and without further exploration and production, Americans will have to import foreign oil from Saudi Arabia.
The Saudis and OPEC may not be in a cooperative mood in 5 years, thus the price of oil could rocket. Remember that EVs will only solve perhaps 10% of oil usage, so the public has been mislead about the source of oil demand and our supplies. This means we could have a severe crisis of supply with no ready solution.
For smart investors, it means oil stock prices are rock bottom right now. Intelligent investors are going to like the supply/consumption dynamics that point to ultra high prices in the coming years. As the global recovery continues, demand for oil will rise significantly.
Last time oil prices went up, oil stock prices rose 6 to 10 times what they are now. And prices might go higher this time with oil producers pumping out more crude. That translates to much higher revenue. Investors are beginning to see the potential. Should you buy oil stocks? Definitely review the possibilities.
The EIA forecasted that Brent crude oil prices would average $71/b in the second half of 2021 and $66/b in 2022. WTI oil surpassed $86. Winter isn’t even here yet so we’ll see prices rise through winter and into the 2022 driving season.
The President’s crashing popularity is in great part due to inflation. The price of oil and natural gas are holding back the economic recovery causing grief and added strain on the social safety net. More Americans are losing belief that a sudden move to green energy is even possible let alone wise. The anti-oil ruse can only go on so long.
If energy prices do get out of hand, and some believe prices well over $100 is certain, the economy, jobs report and stock market are going to take a hit. Check out the many forecasts for oil in the next year below.
Investment advisors have forecasted $200 to $300 a barrel and most are accepting that $100 will happen. Media investment celebrity (Cathy Woods) suggested oil will be much like Whale oil centuries ago — worthless. Yet right now and for the foreseeable future, oil prices suggest oil stocks will be paying big dividends. Already oil companies are big forces on the S&P and Dow Jones.
Oil Price.com’s expert believes OPEC will not increase supply in the coming year. Why would OPEC or Russia increase supply to ease US problems? MarketWatch is holding out a candle for a gush of oil coming from Iran which could ease the global supply problem. It’s a long shot.
The US has an adversarial relationship with Iran (a deadly terrorist dictatorship which threatens the west with nuclear bombs).
It’s only a matter of time before the price of gasoline stirs resentments and a few Republican comments toward Iran would sour any trade freedoms with the terror nation. At some point, Donald Trump will speak out against Iran whether he plans to run in 2024 or not. It will warn and rankle Iran’s leaders.
With a cold winter ahead, restrained output, failing alternative energy solutions, and big demand add up to very high oil prices. Experts say this issue will be persistent and will add to the inflation problem. Natural gas prices are slipping, but there is huge supply reserves and the lack of pipeline infrastructure to deliver will be solved. But oil prices are a different story.
As demand for US oil grows at high prices, oil companies in Texas, Oklahoma, Colorado, and Alaska will do very well. 3 years from now, it’s likely the Republicans will regain total control of the US government and they will open oil production back up. That will significantly raise revenues for US oil producers (and raise oil stock prices) and make the US energy independent again. But demand will be high as the recovery continues and prices won’t fall quickly. Current oil companies will do well. Only a recession will drive oil prices down again.
Alternative energy experts trash oil, but when WTI oil prices reach above $60 a barrel, oil has big investment value. The economies in Dallas, Denver and Calgary are likely to boom. Canadian oil stocks listed below have a special allure and are gaining attention. They’re held back by pipeline blocks which could be removed by the Republicans in 2024.
Oil is at the center of US and world manufacturing and production output. Consumers have huge demand for oil-based products, from jet fuel to electronic devices. The demand never ends.
Right now, the US government’s decision to abandon fossil fuels is looking particularly bad. As gas prices keep rising, and headed to $US5 a gallon, the cost to consumers will change their vote in 2022.
Best Oil Stocks to Buy
Which oil stocks should you buy? Check out these best performing oil stocks today for consistent performers. There are penny oil stocks, risky, but may be your best bet to make a lot of money. As investment pours in, these stocks might jump later in the year when supply gets desperate. See also the best Canadian oil stocks.
Remember 2020 when some investors had the opportunity to jump on oil last year when they were paying people to take it. They were so smart. The price has risen ten fold for some. Other than that dip, the price has been consistently high. And with no US fracking and further oil exploration and the blocking of the Canadian pipeline, US oil companies in Calgary, Houston, Denver, and abroad are certain this year is going to be their best ever.
Highest gasoline price in the US? $4.11
The US national average for gasoline hit 3.19 cents and that hurts those who commute. With lithium batteries and electronic microchips in short supply, there is little concern about EVs taking over the market anytime soon. There are huge issues with electric charging stations (however, check out EVGO share price) too which makes the electric savior seem ludicrous for many, many years.
Oil is the fuel of this decade and prices will rise, until US frackers and new production gets going again. Without fracking, there are big oil reserves that can be developed to help keep the US energy neutral. That means not adding to the burgeoning national debt.
Oil ETFs
Experts believe the best time to invest in an oil ETF is in a period of rising prices. USO ETF took a big loss last spring when the price of oil dropped. It’s not necessarily a safe way to invest but as you can see, ProShares Ultra Bloomberg Crude Oil ETF has seen incredible growth.
Google Finance Oil Gas Energy ETFs
Up to lately, these large energy ETFs haven’t fared well.
US News offers up their best oil stocks to buy:
Okay, to whet your apetite for oil stocks to buy, let’s see what US News suggests. There are many other oil producing companies globally too that offer big upside.
- Exxon (XOM)
- Chevron (CVX)
- Conoco Phillips (COP)
- Schlumberger (SLB)
- Marathon Petroleum Corp. (MPC)
- Pioneer Natural Resources Co. (PXD)
- Phillips 66 (PSX)
And Yahoo’s experts chime in with their best oil stock picks:
- Renewable Energy Group, Inc. (NASDAQ: REGI)
- Exxon Mobil Corporation (NYSE: XOM)
- Energy Transfer LP (NYSE: ET-PD)
- PDC Energy, Inc. (NASDAQ: PDCE)
- Chevron Corporation (NYSE: CVX)
- ConocoPhillips (NYSE: COP)
- NX Resources Corporation (NYSE: CNX)
- Devon Energy Corporation (NYSE: DVN)
- Pioneer Natural Resources Company (NYSE: PXD)
- Renewable Energy Group, Inc. (NASDAQ: REGI)
You can check out more about these companies on InsiderMonkey.
It’s wise for longer term investors to look at Canadian oil companies in Alberta Canada. they’ve been suffering through a bad period, but it’s changing. The tired US administration has blocked Canadian oil, but if the Republicans come back into office (guaranteed), then Canadian oil will flow again. This will ease US oil and gas prices, and leave the US less vulnerable to Saudi Arabia and OPEC.
See the Canadian oil companies below.
For those looking for the best stocks to buy right now, it’s hard to overlook Canadian oil stocks.
The rising price of oil too, has provided a big boost for the economies in Dallas, Houston, Denver, Billings, Anchorage and Austin economies and the economy up in Calgary Canada. The Dallas housing market, Calgary housing market, Houston housing market, Austin housing market and Denver housing market are some of the hottest going.
Oil is going to power the US for a long time, and the world for even longer. Despite the push to alternative energy, the reality is that only oil possesses the power and utility people and business needs. With the stimulus bill from the house in jeopardy, the alternative energy sector may not get the trillions it wants to develop. Not that alternative energy is a bad thing. It’s amazing technology. However, the cost and the output have been misrepresented to a gullible public who are beginning to catch wind of the politics.
3 Month to 6 Month Outlook
Oil experts don’t know what the 3 year to 5 year outlook is right now. Most of the price forces are political, and certainly if the Republicans regain the senate in 2022 and win the 2024 election, it could bring a return to big production increases.
Please do check out stocks to avoid, the best stocks to buy, best tech stocks, and the forecast for the next 6 months.
The higher oil prices are due to:
- reopening economy driving up demand due to commuting and manufacturing growth
- reduced production due to the pandemic
- shale production down in the US
- political restrictions on fossil fuels is discouraging investment and oil rig counts
- speculators like the supply/demand equation
- restriction of oil imports from Canada
- high cost of importing oil from Saudi Arabia
- added taxes and anti-fossil fuel production legislation
Goldman Sachs predictions of $80 a barrel prices almost came true. Very good forecasting. Now the questions is how high oil prices will rise.
Gasoline Price Forecast
EIA expects the retail price of regular-grade gasoline in the United States will average $2.78 per
gallon (gal) during summer 2021, which is more than last summer’s average of $2.07/gal.
And lower oil prices is fuel to a strengthening US economic outlook.
Best Oil Stocks
US News believes these oil stocks have the best outlook:
- Exxon Mobil Corp. (XOM)
- Chevron Corp. (CVX)
- ConocoPhillips (COP)
- Schlumberger (SLB)
- Marathon Petroleum Corp. (MPC)
- Pioneer Natural Resources Co. (PXD)
- Phillips 66 (PSX)
Gasoline Prices Rising Quickly
The hurricane IDA was devastating and gasoline production in Louisiana still hasn’t recovered.
OPEC is the world’s major oil producer and they have agreed to limit production. When supply falls, prices rise. And many sources of oil are drying up (e.g. United Arab Emirates, Venezuela).
The Long Term Future:
IEA said that once US tight oil plateaus in the late 2020s and non-OPEC production falls back, the market becomes increasingly reliant on the Middle East to balance the market. There is a continued large-scale need for investment to develop a total of 670 billion bbl of new resources to 2040, mostly to make up for declines at existing fields rather than to meet the increase in demand. — from report in OGJ.com
For non-oil producing countries, relying on the middle east for oil, and a $100 barrel of oil price is worrisome. Over time, it drains significant wealth out of their countries and jumps inflation. That’s especially so for the US, Germany, France, UK, Japan, Australia, and Canada.
The last time oil prices spiked at $150, they soon crashed along with the US economy and the US housing market. And with real estate prices so high, could we see another housing crash?
Pierre Andurand, an oil-focused hedge fund manager made headlines when he said oil companies won’t invest in new production, thus suggesting a $300 a barrel oil price was “not impossible” within a few years.
Since investors believe green energy is ready for prime time, investment in oil exploration is way down, and oil refineries aren’t being built. As a result, the price of gas is likely to skyrocket in the next 5 years.
So the real story is not crude oil predictions, but rather rising gasoline prices in the US, Europe and Asia.
Adding to potential demand comes from the failure of the Kyoto Accord and the Carbon Tax regime. Once it fully fails, demand for oil will surge.
Never Say Never to Higher Prices
Could Los Angeles home prices double? Since 2012, they have doubled in price. In Toronto, home prices skyrocketed even more, and the local government had to kill the economy to suppress home prices. Canada lost jobs last month against expert predictions of +180,000 more. Constraints on US home building also could cause house price inflation too.
Housing experts: home prices won’t rise that much. They did.
Supply and demand in homes is steady, but demand for oil is much more intense during upward economic growth. With the US, Chinese, and European economies doing well, optimism high, and interest rates low, demand for oil will stay high.
What Drives Oil Prices?
Oil prices are driven by demand from industry for plastics, fuels, and also by supply constraints by producing countries. But the real determinant of prices comes from OPEC, who artificially control production to force prices up to suit their needs. OPEC cartel is a monopoly, whom President Trump warned he may file suit with the world trade organization.
The shut in of US shale oil and other reserves has kept 28 million barrels of oil out of circulation so far this year. That reduction of supply is pushing prices up high. The expectation is that as the world resumes its economic post pandemic activities, the WTI price of oil will surpass $100 a barrel.
The oil embargo of the 1970’s showed us supply and high prices can wreak havoc on economies. Political turmoil, sabotage, war, embargos and more could take a lot of supply out of global markets at a time when global GDP is growing.
Andurand believes high oil prices won’t affect economies, but how can it not? Even though the US is going to be the world’s top producer of oil, Japan, UK, France, Germany, and other nations won’t be able to maintain their economies with growing US protectionism.
Andurand says oil prices need to rise fast to discourage consumption, otherwise a huge price shock will happen in a few years. Everyone is buying huge SUVs and trucks now. Ford stopped making cars. Consumption will rise from vehicles and from commercial products (plastics).
For President Trump and the US economy, high oil prices and gas prices may actually stimulate US GDP growth boosting US gas consumption. The US can grow its exports significantly with oil based products. That’s a big incentive once everyone realizes what an oil rich US is all about. The US is becoming one of the top oil producers and US industry will like what they can do with this new opportunity for lucrative export products.
With Trump putting sanctions on Iran, it could set off trouble. Further, if the Trump government was to come to an end, the US Dems could decide to close down shale oil production and off shore oil production, thus pushing dependence back on the middle east.
Eric Lee of Citibank forecasted $60 for oil and still clings to lower oil price forecasts (in hindsight good call!).
Goldman Sachs predicted this back on Feb 5th: The decline in excess inventories was fast-forwarded in late 2017 by stellar demand growth, high OPEC compliance, heavy maintenance as well as collapsing Venezuela production. Goldman revised their estimate from $62 to $75 and then onto $80.
How times can change fast. Here, Jeffery Curry, head of commodity research at Goldman Sachs discusses oil and business. Expert opinions are that mideast turmoil, greed, and high demand will not raise prices of gas and oil.
Do High Oil Price Rises Predict a Recession
According to a Wall Street Journal report, there is a correlation between price rises and recessions (seen in graphic below). It could be that oil price rises typically happen toward the end of a strong business cycle, which of course always ends. Did the business cycle end because of high oil prices or because all economic booms must die a natural death?
It’s at these times, especially this record length positive growth business cycle, when global economic pressure boosts demand well ahead of supply. And as we just discovered, no one wants to invest in old technology and fossil fuels. Yet, the green revolution is still a long way away.
Perhaps more people will realize how far away electrical energy is and we’ll begin to appreciate the ongoing role of fossil fuels in global economies.
Where to Invest in Oil Stocks
If this is a meteoric rise supported by US producer strength and big global demand for gasoline, it makes sense that the biggest producers will make huge profits. However, smaller oil companies might see their growth rocket even faster.
Take a good look at Canadian oil companies. Right now, pipeline problems are trapping Canadian oil from Alberta and Saskatchewan. Their stock prices may be suppressed as sellers are thinking it is a long term issue. As prices rise, the issues will be forced to resolution and the pipelines will begin to get oil flowing. See more on the US stock market forecast post.
