HSBC analysts warn that geopolitical tensions will trigger oil price spikes throughout 2026, creating market volatility. Despite these disruptions, the bank maintains its forecast for Brent crude at $65 a barrel, arguing that underlying supply and demand fundamentals will ultimately keep prices anchored in the mid-$60s range.

The forecast hinges on a projected global supply surplus of 2.8 million barrels per day, the largest since the pandemic. This oversupply, peaking above 3 million bpd in early 2026, is already evident in elevated oil-on-water inventories. HSBC identifies Iran, Russia, and Venezuela as key geopolitical wildcards that could temporarily lift prices if flows are disrupted.

While OPEC+ is expected to unwind production cuts later in the year, HSBC notes the group’s influence has diminished, becoming more predictable and likely underestimating the market surplus. The analysts caution against excessive bearishness, pointing to China’s strategic stockpiling and potential U.S. foreign policy responses as factors that could provide price support.