Berenberg has lowered its oil price forecast for 2026 to US$65 per barrel from US$70, citing oversupply concerns and weakening macroeconomic indicators.
The European bank, in a note, said it expects global inventories to rise materially in late 2025 and early 2026, weighing on crude prices.
Earnings estimates across the integrated oil sector have been cut by 6% for 2026. Nonetheless, the analysts see potential for recovery beyond H1 2026, as non-OPEC supply growth slows and spare capacity within OPEC becomes constrained.
In stock-specific moves, TotalEnergies has been downgraded to Hold due to its elevated reinvestment ratio and likely reduction in buybacks.
BP PLC (LSE:BP.), Repsol and Shell PLC (LSE:SHEL, NYSE:SHEL), meanwhile, remain Berenberg’s top picks, with strong free cash flow and shareholder return outlooks cited as key drivers.
European gas prices are expected to remain elevated through winter before easing in 2027 as new LNG capacity comes onstream. Sector valuations are near fair value on 2026 estimates, according to Berenberg.