The oil market is always wrong about long-term prices

Let’s be honest: The oil market has always been wrong about long-term prices. Unsurprisingly, it’s currently wrong in anticipating that a barrel of crude will cost around $60 by 2030, close to current levels. Barring an economic cataclysm, oil will be more expensive five years from now.

- JAVIER BLAS

Before the bulls celebrate, however, let me reaffirm that I remain short-term bearish, particularly for the first half of 2026. Little has changed since late 2024, when I warned the price level that mattered wasn’t $100-a-barrel anymore, but rather $50. Unless Opec+ cuts production significantly, and quite soon, oil prices will weaken further in the next few months, probably overshooting to the downside. I’m not convinced that we won't see prices starting with a 4 before the dollar sign, even if briefly, early next year.

But it increasingly feels like the energy market is way too sanguine about oil prices staying low. Look at the oil price curve, and it’s $50 to $60 a barrel from here to eternity. I’m not convinced. Neither is the equity market, where companies that depend on crude cash flows over the longer term — Exxon Mobil Corp and Chevron Corp spring to mind — are faring well.

For simplicity, let's use the five-year forward contract as proxy for long-term oil prices. Admittedly, that contract, currently changing hands at just under $62 for a barrel of West Texas Intermediate crude, isn’t a forecast, but rather the level that buyers and sellers are today — today — willing to trade at for delivery in 2030.