If you thought oil prices were already feeling the pressure, JPMorgan Chase & Co. (JPM) has some news that might make OPEC ministers very nervous. The bank is projecting that Brent crude could plummet to the $30-per-barrel range by 2027, driven by a wave of oversupply that shows no signs of slowing down.
When Supply Runs Wild
The fundamental problem, according to JPMorgan analysts, is simple math with painful implications. While oil demand has actually held up better than the pessimists expected, supply has been growing at more than twice that rate. That's not a sustainable equation for prices.
"Demand, defying widespread bearish sentiment, has consistently exceeded expectations. Yet supply has outpaced these gains by more than twofold, with the bulk of growth coming from the Americas," explained JPMorgan analyst Natasha Kaneva.
Here's where it gets interesting: most of this additional supply isn't coming from OPEC+ countries that coordinate production cuts. It's flowing from non-OPEC+ producers, particularly in the United States, which makes the oversupply problem much harder to manage through traditional cartel coordination.
JPMorgan's price trajectory looks increasingly grim. The bank expects Brent to slip below $60 in 2026, fall into the low $50s by that year's end, and average $42 throughout 2027. If the surplus situation continues without intervention, prices could drift into the $30s. The projected surplus sits at roughly 2.8 million barrels per day in 2026 and 2.7 million in 2027, unless governments step in to curb production.
As of Wednesday, Brent Crude Futures were trading essentially flat at $62.15 per barrel.
California's Drilling Drama and Chevron's Growth Plans
While JPMorgan contemplates a world of cheap oil, California Governor Gavin Newsom is pushing back hard against reported Trump administration plans to expand offshore drilling along the California coast. Newsom called the proposals "dead on arrival" and emphasized bipartisan opposition to the idea. Reports suggest six drilling rights auctions could be scheduled off California's coast between 2027 and 2030.
Meanwhile, Chevron is moving forward with ambitious production plans despite the bearish price forecasts. The company projected 2-3% annual output growth through 2030 and announced plans for an AI-driven data center in West Texas launching in early 2026. Chevron is also highlighting improved cost synergies from its Hess acquisition.
On the financial side, Chevron is getting leaner. The company reduced long-term capital spending to $18-21 billion, planned $1-2 billion in annual asset sales, and set targets for $3-4 billion in cost reductions by 2027. The company forecasts over 10% annual earnings growth at $70 Brent and maintains a cash-flow breakeven below $50 per barrel, which would keep them profitable even in JPMorgan's more pessimistic scenarios.