Crude oil’s uneasy path toward 2030 and the opportunities it presents

Key takeaways

• The IEA’s shift away from near‑term peak‑demand narratives highlights a structurally tighter long‑term outlook, with depletion of 6–8 mb/d per year driving the need for sustained upstream investment. 
• The projected 2026 surplus looks overstated, with the futures curve showing little evidence of a deep or prolonged glut, suggesting the soft patch is cyclical rather than structural.
• Spare capacity is narrowing as Saudi Arabia and the UAE operate closer to their limits, while non‑OPEC+ growth—especially US shale—is flattening, raising the market’s sensitivity to price signals.
• Integrated oil majors and energy‑focused ETFs offer attractively valued ways to position for structurally higher prices, combining income with leverage to a tighter supply environment.

Spare capacity offers only limited reassurance. Saudi Arabia and the UAE remain the only major producers able to raise output at short notice, and both are now operating closer to their expanded capacity levels, naturally reducing the available buffer. The market’s real vulnerability emerges if non‑OPEC+ production slows, particularly in the Americas. Brazil and Guyana have been important growth engines, but their expansion profiles will eventually mature, while US shale output—resilient at around 10.6 mb/d—is beginning to show signs of levelling off. 

That matters because shale has functioned as the world’s “just-in-time” supplier for a decade. If it loses that role, the entire system becomes more reliant on a narrow set of producers—and therefore more sensitive to price signals. Growth of roughly 360 kb/d over the past year is unlikely to be repeated, with the U.S. Energy Information Administration expecting total US production to flatten in 2026 and potentially in my opinion decline should WTI spend another year below USD 60.

The so-called wildcards—Iran, Russia and Venezuela—do little to ease the picture. Russia is constrained by sanctions, technology access and declining upstream productivity. Venezuela has vast resources but lacks the infrastructure, political stability and capital to restore production meaningfully in the near term. Iran is the only producer with measurable upside, having demonstrated output near 3.8 mb/d in the past versus around 3.4 mb/d today. Even if it regained that capacity, the additional volumes would be marginal relative to the annual depletion rate, not to mention the medium-term demand outlook.

Taken together, these dynamics frame 2026 not as a year of surplus comfort, but as a year where the seeds of future tightness are planted. A temporary dip in prices would not be surprising in Q1, but it would represent short-term noise rather than long-term equilibrium. The structural reality is simple: the world will require sustained investment to prevent a supply crunch in the early 2030s, and that investment only materialises if prices remain high enough to justify long-cycle commitments.

The market must therefore choose between two paths. It can allow prices to firm gradually—supporting the drilling, upstream expansion and long‑cycle projects required over the coming decade—or it can risk far sharper price increases later as scarcity becomes the dominant driver. Even with a short‑term overhang, deferring investment only amplifies future tightness. The core message is not that a surplus looms in 2026, but that meeting future demand requires a sustainably higher price environment. The earlier that price signal appears, the lower the eventual peak is likely to be. A disorderly surge in crude prices benefits no one, especially producers depending on crude production as their main revenue generator as it accelerates the shift toward alternatives, tightens financial conditions and risks renewed inflation alongside slower growth.

Trading the long-term squeeze: positioning for higher oil prices

For investors looking to position for structurally higher crude, the integrated oil majors remain the most direct and liquid route. The sector continues to trade at modest valuations relative to broader equity markets, with earnings multiples still discounting a world where long‑term oil demand stagnates. The IEA’s shift away from early peak‑demand narratives challenges that assumption, and the combination of low valuations and strong free cash flow makes the majors natural beneficiaries of a firmer price environment.

The five largest integrated producers—ExxonMobil, Chevron, Shell, BP and TotalEnergies—offer diversified exposure across upstream, downstream and low‑carbon assets. Their upstream operations provide leverage to rising crude, while refining and marketing divisions help stabilise earnings. With disciplined capex and an emphasis on dividends and buybacks, these companies are well‑positioned if crude prices strengthen in line with the structural outlook.

For broader exposure, investors can consider energy‑focused ETFs. XLE and IOGP provide large‑cap integrated and upstream coverage, while XOP offers a higher‑beta alternative via exploration and production companies. These instruments offer diversified, liquid exposure to a sector that remains attractively priced relative to both historical norms and other commodity‑linked industries.

If the market shifts toward a higher and more durable price regime—as supply‑demand fundamentals suggest—the energy equity complex offers a balanced way to participate, combining income with leverage to a structurally tighter crude market.