The oil market has been under intense scrutiny lately, and numerous questions surround its future. With fluctuating prices and geopolitical risks, the industry finds itself in a complex environment. But could things take a turn for the better in 2026? We sat down with Joseph Shakar, a leading voice on global energy markets from the Shakar Energy Report, to discuss his insights on the oil market, the potential for price increases, and what lies ahead for the industry.
Why Oil Prices Are Weak in 2025
At the start of 2025, oil prices hovered around $79 per barrel, with hopes for solid global economic growth. However, the optimism quickly faded due to a series of international events. Early signs of economic weakness in both the U.S. and China led to a downturn in consumer demand. As a result, the price of oil, which had seemed poised for growth, began to slide. With weakening demand and uncertainty caused by geopolitical tensions, the market started to show signs of distress. By the time the oil markets faced further pressure from geopolitical risks—such as issues with Iran and Venezuela—the price spiked to $79, only to cool down again as the geopolitical concerns were temporarily resolved.
As Shakar notes, the forecast for oil prices was bleak, and they anticipated the price could fall below $60 per barrel. But, with persistent uncertainties surrounding global markets, oil prices didn’t dip as much as expected. Despite these challenges, Shakar sees potential for significant growth over the next few years.
Potential for $150 Oil in the Coming Years
Looking ahead, many experts, including renowned investor Warren Buffett, predict that oil prices could climb to historic levels, possibly breaching $200 per barrel. While Shakar isn’t yet prepared to commit to such a high forecast, he does believe that $150 per barrel could become a reality in the next 5-7 years. As Shakar points out, for the oil industry to thrive, the price needs to rise beyond $55 per barrel, which is insufficient to stimulate investment and growth in production.
For countries like Canada, the U.S., and Norway, the industry needs oil prices to reach around $75-80 per barrel to encourage more spending and infrastructure development. However, the process to see these increases won’t be immediate. As Shakar notes, the industry needs higher prices to drive spending in critical areas such as drilling and refining, but these changes take time.
The Road Ahead: Soft Prices and Strategic Shifts
The outlook for oil prices in the first quarter of 2026 is mixed. Shakar may see prices hover between $52 and $66 per barrel. However, once we move into the second quarter, he expects global inventories to begin declining, which will put upward pressure on prices. Strategic reserves, such as the U.S. Strategic Petroleum Reserve (SPR), will continue to rise, contributing to a more balanced supply-demand scenario.
Looking ahead to the second half of the year, Shakar anticipates that oil prices could rise again, potentially reaching the $ 70-per-barrel range. With new capacity from regions such as Africa, China, and Asia, demand is expected to increase, potentially triggering a stronger price recovery by the second quarter of 2026.
The Oil Market’s Long-Term Bullish Trend
Although the short-term outlook is somewhat uncertain, the long-term outlook for oil remains bullish. Shakar explains that over the next decade, we can expect oil prices to rise as global demand grows, particularly from non-OECD countries. With geopolitical factors and a lack of sufficient investment in new projects, Shakar believes that the oil market is headed for another super cycle, similar to the one we witnessed in 2008.
This market cycle will be characterized by high demand from emerging markets, such as Africa, Asia, and South America. At the same time, more developed nations, including the U.S. and Europe, may experience a slowdown in consumption due to climate policies and the transition to new energy needs. This global shift in demand, combined with a lack of new oil production capacity, will likely lead to sustained upward pressure on oil prices in the coming years.
Investing in the Oil and Gas Industry: Opportunities and Risks
For investors, the oil market presents both challenges and opportunities. Shakar points out that while many oil companies are currently trading at low multiples—primarily Canadian energy stocks—there is significant potential for growth. The industry has seen a slow recovery in terms of investment, but as prices rise and more capital flows into the market, stock prices could see substantial gains.
A key takeaway is that the oil industry is currently undergoing a period of consolidation. Smaller oil companies in Canada are presently trading at discounted prices, which could present an excellent investment opportunity. Companies like Freehold Royalties, Termolene Oil, and Birchcliffe Energy are some of the undervalued players in the market that could see a resurgence as the market heats up.
Looking Beyond Oil: The Role of Natural Gas and Infrastructure
While oil remains the focus, Shakar also highlights the importance of natural gas in the global energy transition. With increasing demand for clean energy, natural gas is expected to play a key role in the energy mix over the coming decades. Shakar highlights the growth of liquefied natural gas (LNG) exports and the need for infrastructure development in key regions, such as Western Canada and the U.S.
As the demand for LNG grows, the natural gas sector is expected to see an increase in production, particularly from areas such as the Marcellus Shale, Haynesville, and Montney formations. With new export facilities and growing demand from countries like China, natural gas could experience significant price increases, especially as supply constraints continue to limit growth.
Conclusion: The Oil Market’s Resilience and Future Outlook
The oil market is at a crossroads, with geopolitical tensions, economic uncertainty, and shifting demand patterns affecting the outlook. While prices may be soft in the short term, Shakar’s insights suggest that the industry is poised for a recovery starting in the second quarter of 2026, with oil prices likely to push higher as global demand increases and production capacity struggles to keep pace.
For investors, the next few years could be a period of significant opportunity, particularly for those willing to look at undervalued Canadian oil and gas companies. As Shakar rightly points out, the oil market operates in long cycles, and now may be the time to position for the next phase of the bull market.
To stay informed about the latest trends and investment opportunities in the energy sector, be sure to follow the Shakar Energy Report and keep up with the evolving landscape of global energy markets. For more in-depth insights and updates on precious metals, energy investments, and other resources, check Natural Resource Stocks.
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