Despite a global oil surplus expected to stretch into 2028, Bank of America analysts now project Brent crude prices will average between $60 and $80 per barrel through 2031, reflecting structural demand resilience, depleted inventories and geopolitical drivers that continue to support the world's most vital commodity.

In a note to clients, Francisco Blanch, head of commodities at Bank of America, noted that even as Brent crude faces persistent downward pressure due to surplus supply, prices have remained buoyant.

Oil's Supply Surplus Isn't Sinking Prices — Yet

This is due to low commercial stockpiles, particularly outside China, and robust strategic reserve purchases by countries seeking to hedge against growing geopolitical uncertainty.

After peaking at $128/bbl in 2022, Brent now trades closer to $60, and BofA expects an average of $60 this year, down from $68 in 2025.

However, medium-term fundamentals continue to support the bank's upgraded range of $60 to $80/bbl to 2031, versus the $50 to $70 range seen from 2016 to 2021.

"We see Brent again averaging $60 to $80 per barrel to 2031 to keep the market balanced, up from $50–70 during 2016 to 2021," Blanch said.

Oil Demand Growth Set To Peak After 2030

Global oil consumption is projected to hit 108 million barrels per day by 2031, up from 104 million in 2025, with a third of that increase expected between 2026 and 2027.

Demand is projected to peak in the 2030s, but BofA still sees a healthy uptick in the near term.

"Demand is set to peak in the 2030s, but global consumption should still grow by 4 million barrels per day from 2025 to 2031," he said.

China's Oil Hoarding Is Distorting Global Balances

China has emerged as a wildcard in the global oil market. In 2025 alone, China's strategic reserves and floating oil storage rose by 380 million barrels, offering Beijing not only a geopolitical buffer but also an inflation hedge.

According to Blanch, China's massive trade surplus provides ample room for dollar diversification — and oil fits the bill.

"China doesn't care about the shape of the oil curve — it's using its trade surplus to build reserves and reduce exposure to Western assets," Blanch said.

Crude Remains a Strategic Geopolitical Asset in a Shifting World

BofA sees geopolitical risk as a growing driver. From rising tensions in the Middle East to instability in major producers, the threat of supply disruption looms large.

Simultaneously, inflationary pressures in oil production — such as costlier shale extraction and deeper wells — are anchoring long-dated prices.

In the U.S., shale producers face rising break-even costs and are drilling longer laterals just to maintain production levels.

This contrasts sharply with OPEC+, whose reserves remain the cheapest globally but which is now unwilling to continue ceding market share.

While gold has surged as a hedge against fiat debasement, crude oil remains a cornerstone of strategic reserves — particularly for countries wary of financial weaponization.

With the U.S. dollar weakening, oil becomes more attractive for non-dollar economies, and that shift is visible in oil volatility levels, which have risen alongside policy and macro uncertainty.

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