Barclays analysts have revised up their medium-term crude price outlook and adjusted sector ratings, arguing that ongoing supply disruptions and tepid shale growth are creating a longer runway for elevated oil prices. In a note published Tuesday, the bank raised its WTI forecasts for 2027 and 2028 to $80 and $75 per barrel, respectively, and said Brent projections were also increased.
The bank pointed to sustained production losses in the Gulf as a central factor. Citing IEA estimates, Barclays said more than 14 million barrels per day of Gulf production remain shut in, a development the bank believes has driven a pronounced drawdown in global inventories and effectively erased spare capacity within OPEC.
Given those dynamics, Barclays expects oil market balances to stay tight for at least the next two to three years. The firm emphasized that supply recovery timelines are slow and that U.S. shale producers are likely to be only modestly responsive to higher prices, factors that together support a multi-year period of stronger cash generation for oil-focused companies.
Under Barclays' updated price path, the brokerage projects that oil-weighted exploration and production companies could produce free cash flow equivalent to more than 60% of enterprise value over the coming five years. The bank said current equity valuations do not fully reflect this improved earnings outlook.
On the company front, Barclays moved Occidental Petroleum to Overweight from Equal Weight and raised its price target on the stock to $72 from $59. The analysts cited Occidental's progress on deleveraging, gains in capital efficiency and its sizable low-cost resource base as reasons the company is positioned for stronger long-term shareholder returns.
Barclays also estimated that Occidental could generate enough free cash flow to hit its debt target and effectively prefund obligations tied to Berkshire Hathaway's preferred stake by the second half of 2027. The bank highlighted operational improvements across Occidental's Permian business, its Gulf of America operations and enhanced oil recovery projects as factors that are not fully captured in current market valuations.
Not all recommendations were bullish. Barclays downgraded Expand Energy to Equal Weight from Overweight, pointing to weaker near-term natural gas fundamentals and a slower-than-expected realization of margin expansion initiatives. The bank cut its Henry Hub price forecasts for 2026 and 2027 to $3.70 and $3.50 per MMBtu, respectively, and warned that new pipeline capacity alongside rising supply could keep storage levels elevated.
Among other names singled out by the bank, Barclays said Devon Energy, California Resources Corporation and ConocoPhillips continue to look attractively valued relative to peers and to their historical trading multiples. The bank's view suggests these oil-weighted producers could benefit from the tighter market and improved cash-flow potential implied by the updated price deck.
In sum, Barclays' note frames a multi-year period of elevated oil prices driven by constrained Gulf output and limited shale response as an opportunity for oil-focused producers to convert stronger prices into material free cash flow, though outcome timing will depend on the pace of production recoveries and shale behaviour.