MARKET OUTLOOK · OCTOBER 2026

Oil May Be Entering a New Era

By Per · Pers Aktieblogg · @persaktieblogg on X
Published 25 October 2026 · Updated 26 October 2026 · Based on my 18 October research outline

I think we may be early in a much longer energy cycle. The Middle East crisis has made the problems obvious. But the investment decisions behind them were made years ago.

Around 30% of my portfolio is now in energy-related shares. Quite a bit of exposure, so worth explaining why. I also own companies that help reduce energy consumption. Two ways of investing in the same theme.

The part I find most interesting is what happens after the crisis. Shipping starts working again, production returns, oil falls. Then what? The tanks still need filling and new projects still take years. That is where my longer-term case starts.

Three phases: disruption, inventory rebuilding and new supply

Three parts to this:

• Now to summer 2027: the acute crisis. Disrupted shipping, tight fuel supply and stocks being used to cover the gap.
• 2027–2029: production and trade recover. Countries and companies start looking at their depleted inventories.
• 2028 onward: have we actually invested enough to meet the demand that remains?

The dates will overlap. Summer 2027 is my guess for some stabilisation, and timing these things is difficult. But it helps to separate the immediate problem from the one that could last much longer.

Why oil inventories are falling despite weaker demand

One number stands out in the IEA’s October report: observed global inventories at the end of September were 509 million barrels below the end of February.

At the same time, the IEA expects demand to fall by 2.6 million barrels a day in 2026. High prices are already hurting consumption. Yet the inventories keep shrinking. That says quite a bit about the supply problem.

EIA’s September estimates put shut-in Middle East production at 4.8 million barrels a day. Brent spot averaged $114 a barrel in their series. These are the EIA figures; the IEA uses a separate North Sea Dated assessment.

Why summer 2027? Partly because the system has time to adapt. More pipeline use, different routes and transfers between ships. EIA also assumes improving exports in its October outlook. Whether the war itself is over by then, I have no idea. I am looking for more oil reaching buyers.

Rebuilding emergency stocks could add to oil demand

This is one of the stronger parts of the case, in my view. Emergency stocks get us through a crisis. At some point, countries will probably want at least part of that insurance back.

The IEA’s 15 October statement put releases at around 330 million barrels, with roughly 100 million still to come. Total releases are set to exceed the original 400-million-barrel commitment.

Refilling means buying oil above what is being consumed day to day. How fast? Depends on prices and politics. But the need does not disappear just because shipping improves. Also, do not add these releases to the 509 million above. The figures can overlap.

Worth looking back at 1979 here. Federal Reserve History describes how fear of further shortages led to precautionary buying and hoarding, pushing prices higher. A crisis can change how much stock people want to hold. That is the interesting bit for me.

Explore the inventory rebuilding scenarios →

Replacing declining oil fields leaves less investment for growth

Almost 90% of annual investment in oil and gas production since 2019 has gone into replacing declining output, according to the IEA’s 2025 field study. That leaves a much smaller share for growth.

Another number from the same report: almost 20 years on average from a new exploration licence to first production for conventional projects. Existing fields can be expanded faster. Still, waiting until the shortage arrives is a difficult strategy.

Put yourself in the producer’s position. Commit billions today, with production years away, while much of the debate assumes oil demand will soon decline. How much extra capacity do you build?

I think that uncertainty matters. So do earlier oil crashes, higher project costs and shareholders wanting their money back. Plenty of reasons to be careful with new projects. The problem comes if demand then holds up better than the investment plans assumed.

Refining capacity and the risk of regional diesel shortages

You can have plenty of crude and still be short of diesel. Someone needs the right refinery, the right feedstock and a way to get the finished product to the buyer. This part is easy to miss when everything gets reduced to the oil price.

Grangemouth stopped refining in April 2025 and became an import terminal. Replacing a refinery is expensive. Nigeria’s Dangote complex represents an investment above $19 billion, with refining operations starting in 2024. Big money, even for the energy sector.

There is new capacity coming too. The IEA’s pre-crisis Oil 2025 outlook had additions of 4.2 million barrels a day against closures of 1.6 million through 2030. Net increase: 2.6 million. Much of the growth in Asia, with closures in Europe and the US.

So the case is about where the capacity sits and what it produces. A global total can look fine while a particular fuel market is very tight. That is why I follow diesel inventories and refining margins.

Check diesel inventories → · Explore the PBF margin tracker →

Oil demand: how quickly can electrification reduce oil use?

I drive two electric cars. Fantastic technology. But replacing new car sales and replacing the world’s entire vehicle fleet are very different jobs. Then there are trucks, planes, industry and petrochemicals.

Even within the IEA, the paths differ quite a lot. In World Energy Outlook 2025, oil use flattens around 2030 under the Stated Policies Scenario. Under the Current Policies Scenario, it keeps growing through 2050. Different policy assumptions, very different investment needs.

India and other growing economies matter here. But more energy demand does not translate one for one into more oil. Efficiency and electrification do real work.

For my case, the key is how demand develops relative to supply. Consumption could decline and the market could still tighten if production capacity falls faster. That is the relationship I want to keep an eye on.

AI data centres add to electricity and natural gas demand

A lot happening here. The IEA’s 2026 outlook has data-centre electricity consumption going from 485 TWh in 2025 to 950 TWh in 2030. Nearly double, if that path plays out.

Look at Entergy’s plans tied to Meta in Louisiana: seven new gas-fired plants with more than 5,200 MW, plus transmission and batteries. Planned capacity, so it will take time. But it gives a sense of what these projects require.

This is mainly a natural-gas and electricity story. Diesel backup is useful, but a generator that barely runs will not move global oil consumption much. The more interesting part is the energy needed every day, once the data centres are operating.

Company exposure: oil producers, refiners and energy efficiency

Producers: International Petroleum Corporation and Meren Energy, for example. The oil price matters a lot when costs do not move up and down at the same pace as revenue. Production and the cost of getting each barrel out still matter, of course.

Refiners: PBF Energy and Marathon Petroleum. Here I am more interested in the gap between crude costs and finished product prices, especially diesel. Expensive oil on its own does not tell you whether a refiner is doing well.

Then the companies helping customers use less energy. Another way to get exposure to the theme. Individual valuations need their own work; this is the bigger picture behind my roughly 30% energy allocation.

Production, deliveries and inventories: what I am watching

The war can end. Ships can get through again. Oil can fall quite a bit from here. None of that would fix years of investment decisions overnight.

My view is that rebuilding inventories, long project lead times and demand holding up could give energy a much longer cycle than the market expects. Plenty can happen along the way. I certainly do not expect a straight line up.

From here I am watching production, actual deliveries and the inventories. If the barrels return and stocks recover easily, that matters for the case. If they struggle to recover even after shipping improves, that gets interesting.

Buckle up and enjoy the ride.

Follow the world oil balance → · Follow the Hormuz situation → · More Market Analysis →