A confident narrative has dominated oil markets for months: supply will exceed demand by a wide margin and prices must fall sharply. Yet Brent has hovered around 68 dollars, and the futures curve has remained firmly backwardated into 2027, meaning prompt barrels still trade at a premium to later deliveries. That is not how markets behave when they are drowning in excess supply.
For Egypt, this debate is not theoretical. Oil feeds into freight costs, inflation dynamics and fiscal planning. Egypt also sits beside one of the world’s most strategic energy corridors. The EIA estimates that oil flows through the Suez Canal, the SUMED pipeline and the Bab el Mandeb accounted for roughly 12 percent of global seaborne traded oil in the first half of 2023. In a market that constantly reprices disruption risk, geography backed by functioning infrastructure becomes an economic asset.
The Egyptian Gazette spoke with Julio Alonso Ortega, political economist and partner at Qabas Consulting & Training, about where prices may land this year and why the physical market keeps contradicting the popular storyline.
QUESTION: Where do you see Brent trading in 2026?
ANSWER: My central case is an average close to 60 dollars, with most trading between roughly 55 and 85. The market is not positioned for collapse, but neither is it set up for a structural return to 100. Think in terms of a wide range with sharp moves rather than a steady trend.
Q: What would push prices to either extreme?
A: To sustain prices in the low 50s you would need persistent, visible inventory builds that convince traders the system is comfortably supplied. To sustain prices in the 90s you would need a material disruption that removes supply for long enough to change behaviour, not just headlines.
Q: The EIA expects Brent to average about 58 dollars in 2026 and 53 in 2027 as inventories rise. Is that reasonable?
A: It is coherent if inventories build as projected. The EIA’s own mechanism is clear: production exceeds demand and global stocks rise. But markets trade urgency, not annual averages. Even in a year where the average price drifts lower, you can still see periods of firmness if traders doubt the durability of supply or fear disruption.
Q: Why has the projected surplus not already driven a sharper sell off?
A: Because most surplus arguments are built on flow balances. Those are estimates of production minus consumption. The physical market clears through stocks, logistics and response. Inventories can absorb imbalance. Producers adjust. Trade routes shift. A few million barrels per day on paper does not automatically translate into barrels accumulating in a way that forces capitulation.
Q: You often mention the futures curve. Why does it matter?
A: The front of the curve is a live signal. When prompt barrels trade above later ones, the market is paying for immediacy. The point is straightforward: the curve has been saying tight now, easier later. The far end of the curve is thinner and shaped by hedging and risk premia, so I weight the liquid front more heavily.
Q: How important is geopolitics in today’s pricing?
A: It is embedded in the price. Geopolitics affects shipping routes, insurance costs, lead times and risk perception. The system is more tightly coupled and more financialised than it was in the calmer 1990s. That makes volatility structurally higher. Risk is not an add on; it is part of the clearing mechanism.
Q: Demand growth is slowing globally. Should that not cap prices more decisively?
A: Slower growth changes the long-term trend, but price is set at the margin. Even with decelerating demand growth, if supply is less elastic and buffers are thinner, small shocks can move prices disproportionately. That is why I expect cycles around a shifting baseline rather than a smooth decline.
Q: What does all this imply for Egypt?
A: It implies that volatility is the key variable. The risk is not only the average oil price, but the spike that feeds through freight, inputs and expectations. The opportunity is that reliability gains value when markets are nervous. Egypt’s position along the Suez and SUMED corridor gives it structural relevance. With continued state-led investment in infrastructure, firm energy pricing reforms and stronger institutional execution, the fundamentals are moving in the right direction. Egypt is increasingly positioned not as a victim of energy cycles, but as a confident, stabilising force within them.
