Bloomberg Businessweek – Oil Traders Weigh Surplus, Geopolitical Risks to Start 2026

Date: January 5, 2026
Host(s): Carol Massar and Tim Stenovec
Guests: Kevin Crowley (Senior U.S. Oil Reporter, Bloomberg), Tim Morris (Senior Research Analyst, Clear Street)

Episode Overview

This episode explores the dynamics impacting oil prices at the start of 2026, with a deep dive into the ongoing global oil surplus, the muted market response to geopolitical risks, and the longer-term outlook for both fossil fuels and clean energy. Host Carol Massar and her co-host engage with sector experts Kevin Crowley and Tim Morris for insights on price trends, energy independence, OPEC strategy, and the role of the U.S. in both oil and clean energy markets.

Key Discussion Points & Insights

1. State of the Oil Market: Prices and Surplus

• Main Theme: Oil prices remain low due to a pronounced global surplus, despite the presence of significant geopolitical risks.
• Kevin Crowley [02:39]:
  • Oil dropped ~18% in 2025, entering 2026 at Brent ~$60/bbl and WTI in the high $50s.
  • The surplus is driven by non-OPEC countries—U.S. shale, Canada, Brazil, and Guyana.
  • The IEA projects an oversupply of ~3.8 million barrels/day in 2026.
  • "This has been one of the most well-telegraphed oversupply instances in a very long time." ([02:39])
  • Market is looking to see when oversupplies will be worked through: medium-term outlook is more upbeat ("constructive").

2. Demand Trends and Tech Impact

• Kevin Crowley [04:26]:
  • Despite the energy transition, "oil demand continues to grow."
  • Data center buildouts and a strong U.S. economy, along with potential rate cuts, support rising demand.

3. Potential for Price Recovery & OPEC Strategy

• Tim Morris [05:34]:
  • OPEC has recently been catching up on prior supply curbs, and is not expected to raise quotas imminently.
  • Clear Street expects oil to average in the "low 60s throughout the year."
  • Not viewing a return to the $70s/$80s, but a stable price band helps oil companies plan.
  • "A lot of the stocks that we talk to and cover, they break even $50, $54 for free cash flow." ([05:34])
• Tim Morris on drilling incentives [06:55]:
  • Companies like Magnolia Oil & Gas are showing 7% production growth at current price levels.
  • "Having a tighter band with less volatility probably this year than there was last year" is helpful for industry planning.

4. US Oil Company Discipline and Efficiency

• Kevin Crowley [08:08]:
  • Capital discipline is the current mantra for oil majors, emphasizing shareholder returns and high-quality projects.
  • U.S. shale producers are increasing efficiencies: "They drill longer lateral wells, they put more power into their fracking... this really allows them to drive down their breakeven and to make money at this, at a $60 level." ([08:08])
  • Oil equities diverged from oil prices last year: oil down nearly 20%, but big oil stocks up 10–15%.

5. Clean Energy vs. Oil & Gas Outlook

• Tim Morris [10:06]:
  • Clean energy stocks outperformed the S&P by 35% in 2025.
  • Demand for electricity is sharply rising (up to 5–6% growth per year, largely attributable to hyperscale data centers, EVs, crypto, heat pumps).
  • "A lot of stocks we cover, their customers are utilities or commercial industrial, new plants, semiconductor plants...They could probably spend about 35% more on the transmission distribution side over the next five years to really close that, that shortfall imbalance." ([10:06])
  • There are multi-year tailwinds for investments in grid upgrades and related clean energy infrastructure.

6. Low Oil Prices and Incentives for Energy Innovation

• Tim Morris [11:30]:
  • Low oil prices can dampen, but don’t eliminate, incentives for energy technology investment.
  • Solar and storage still look promising—especially residential solar "with battery storage."
  • "You need just more than one energy source. You need natural gas, you need some oil, you need solar, you probably need some wind." ([11:30])

7. Is the U.S. 'Energy Independent'?

• Kevin Crowley [12:20]:
  • The U.S. is "largely" energy independent: produces nearly 14 million barrels/day, ~40% more than Saudi Arabia—"more than any other country has ever produced in history."
  • U.S. still imports some oil for its specific refinery needs (heavier crudes).
  • "For all intents and purposes is as energy independent as it's been in decades." ([12:51])
  • It’s more expensive for the U.S. to extract oil than for Saudi Arabia, but U.S. break-evens (~$50s/bbl) remain viable at current prices.
  • "Saudi Arabia needs a much higher oil price to balance its budget." ([13:06])

Notable Quotes & Memorable Moments

• On Surplus:
  “This has been one of the most well-telegraphed oversupply instances in a very long time.”
  — Kevin Crowley [02:39]

• On OPEC Discipline:
  “We like when investors are bearish and think there’s a low oil prices and we see reason for oil price, you know, to maybe average, possibly low 60s throughout the year.”
  — Tim Morris [05:34]

• On Capital Discipline in Big Oil:
  “We’re not going to spend excess money on production. We’re going to focus on shareholder returns... investing in the very, very best projects that will give us the lowest breakevens.”
  — Kevin Crowley [08:08]

• On Clean Energy Growth:
  “We think there’s a tailwind for the next three or four years of massive expense spending by the utilities.”
  — Tim Morris [10:06]

• On U.S. Energy Independence:
  “The US is producing nearly 14 million barrels of oil a day, which is...more than any other country has ever produced in history.”
  — Kevin Crowley [12:20]

Timestamps for Key Segments

• [02:39] – Kevin Crowley outlines the global oil surplus and price outlook
• [05:34] – Tim Morris discusses OPEC discipline and forward price band
• [08:08] – Crowley on big oil capital discipline and U.S. shale efficiencies
• [10:06] – Morris on clean energy outperformance, drivers behind electricity demand
• [11:30] – Discussion on low oil prices’ effects on clean energy incentives
• [12:20] – Is the U.S. energy independent? Crowley explains
• [13:06] – Relative cost structures: U.S. vs. Saudi oil extraction

Tone & Language

The conversation remains analytical, accessible, and focused on practical implications for investors, policy-makers, and the broader economy. Both guests provide fact-based commentary with a measured, forward-looking perspective. The hosts elicit opinions on both tactical (2026 outlook) and strategic (energy future, independence, grid infrastructure) considerations.

Conclusion

This episode gives listeners a comprehensive snapshot of the oil market's supply-demand tension entering 2026, the muted effect of geopolitical risks, OPEC’s calculative approach, and the strong tailwinds for electricity infrastructure and clean energy. It’s insightful for both market-watchers and those curious about the broader intersection between traditional and renewable energy.