International crude oil prices are projected to experience a sustained decline over the next two years, with the average cost of a barrel expected to fall to US$79 in 2027 before dropping further to US$70 in 2028, according to the October 2026 Commodity Prices Outlook.
The latest projections indicate that crude oil will command an average price of approximately US$91 per barrel in 2026, before entering a downward trajectory as changes in global consumption patterns and supply conditions reshape the international petroleum market.
The report further forecasts a significant contraction in worldwide oil consumption in 2026, estimating a decline of 2.5 per cent, which would represent the third steepest annual reduction on record, surpassed only by the disruptions experienced during the COVID 19 pandemic in 2020 and the oil market upheaval of 1980.
Explaining the factors underpinning the projected reduction in demand, the publication attributed the development to interruptions in petrochemical manufacturing arising from shortages of essential feedstocks and restrictions on exports.
It also identified the growing substitution of crude oil with alternative energy sources across certain industrial operations, particularly in response to elevated petroleum prices, as another contributing factor.
Additionally, the increasing adoption of electric vehicles, especially in China, is expected to diminish demand for conventional transport fuels, further weakening the consumption of petroleum products across international markets.
On the supply side, worldwide crude oil production is forecast to contract by 5.2 per cent in 2026, representing the most substantial annual reduction in more than four decades outside the exceptional circumstances of the 2020 global economic recession.
Although moderate production increases are anticipated in developed economies, particularly Canada and the United States, alongside additional output from countries across Latin America and the Caribbean, these improvements are expected to compensate for only a limited proportion of the considerable production shortfalls affecting the Middle East.
The report nevertheless anticipates a gradual improvement in export volumes from the Gulf region next year, assuming that the operational adjustments introduced in recent months to maintain and expand crude oil shipments remain effective.
Under this projection, the continued application of those alternative operational arrangements is expected to facilitate a gradual recovery in petroleum exports, potentially easing some of the supply constraints that have characterised the international oil market.
The anticipated decline in crude oil prices therefore reflects a combination of weakening global consumption, changing industrial energy requirements, accelerating electric vehicle adoption and evolving production and export conditions.
Although significant supply disruptions could continue to influence market movements, the outlook suggests that international petroleum prices could moderate considerably between 2026 and 2028 as global demand and supply conditions adjust.
