International crude oil prices showed strength in February 2026, with Brent crude closing at $70.85 per barrel by February 26, marking a 6.86% increase from the beginning of the month. This upward momentum was primarily driven by heightened military activities between the United States and Iran, including the deployment of U.S. naval vessels near Iranian waters, which raised market concerns over escalating tensions.

For the first quarter of 2026, OPEC+ has paused its production increases, though the alliance may resume a "modest output hike" mode after April. Meanwhile, non-OPEC+ countries are projected to contribute an additional supply of 600,000 to 1 million barrels per day annually during 2026-2027. Overall, the global crude oil supply-demand balance is expected to remain relatively loose throughout the year.

Key insights include:

**Geopolitical Tensions Fuel February Price Rally** Strengthening oil prices in February were largely influenced by geopolitical factors, as both the U.S. and Iran intensified military maneuvers. Market apprehension regarding a potential escalation supported price gains during the period.

**OPEC+ Output Increase Paused in Q1, Potential Modest Hike from April** In a statement issued on January 4, 2026, OPEC+ producers decided to maintain the production plan established in early November 2025, continuing the pause on output increases through February and March. Recent indications from some representatives suggest the alliance may reintroduce slight production increases starting in April.

**Non-OPEC+ Supply Expansion** Non-OPEC+ countries, led by the United States, Brazil, and Canada, are expected to sustain crude output growth during 2026-2027. According to OPEC+ monthly reports, non-OPEC+ crude production is forecast to increase by 630,000 barrels per day in 2026 and 610,000 barrels per day in 2027. Contributions include Canada adding 110,000 and 130,000 barrels per day, Brazil increasing by 160,000 and 140,000 barrels per day, and Argentina raising output by 60,000 and 90,000 barrels per day in 2026 and 2027, respectively.

**Upward Revision in 2026 Demand Forecast** Based on average projections from OPEC+, the EIA, and the IEA, global crude demand is anticipated to grow by 1.143 million barrels per day in 2026 and 1.32 million barrels per day in 2027. OPEC+ expects increases of 1.38 million and 1.34 million barrels per day, the EIA forecasts growth of 1.2 million and 1.3 million barrels per day, while the IEA projects an 850,000-barrel-per-day rise in 2026.

**Crude Inventories at Five-Year Low** Since the second half of 2020, improved demand and OPEC+ production cuts have driven a global inventory drawdown. Current crude stockpiles remain near five-year lows. The United States has plans to replenish its strategic petroleum reserve. Prior to the Russia-Ukraine conflict, U.S. strategic reserves stood at approximately 580 million barrels. Following subsequent releases to stabilize prices, reserves totaled about 415 million barrels as of February 20, 2026. While a replenishment trend has been observed since August 2023, levels remain at historic lows dating back to 1984.

Risks include significant crude price volatility and potential policy shortfalls.