Dec 31, 2025
Major oil companies are bracing for lower prices and tougher decisions in 2026.
Several trends emerged in the energy markets in 2025 and are expected to continue influencing the global oil, gas, and energy equities markets into 2026.
There will undoubtedly be many unpredictable factors in 2026, particularly in terms of geopolitics and tensions escalating from the Caribbean to Yemen. Although these elements are difficult to foresee, they will affect global energy markets and investor perceptions.
Among the trends that can be forecasted, the supply-demand dynamics in the oil and gas markets, along with the challenges and opportunities for major oil companies and other energy firms, will be crucial to monitor in 2026.
Oil and Gas Supply Waves
The current oversupply in the oil market is evident in the recent price fluctuations. Geopolitical events have caused short-term increases and decreases in oil prices, but these changes have been less dramatic than they would be in a tighter market.
The market is expected to have a surplus of up to 3.84 million barrels per day (bpd) by 2026, according to the latest IEA report from December.
Many analysts believe this oil surplus will not last long, predicting a market adjustment later in 2026 and into 2027.
Goldman Sachs noted in its Commodities Outlook 2026 that “While 2026 is the final year of the oil supply wave, the LNG supply wave will extend longer, with a forecasted rise in LNG exports of over 50% from 2025 to 2030.”
“Although our 2026 base scenario predicts excess oil supply, disruptions from Russia, Venezuela, and Iran pose significant risks, particularly as OPEC+ spare capacity diminishes,” wrote Goldman’s commodity research team in their December outlook.
According to the investment bank, supply waves will become the primary drivers of oil and natural gas prices in the coming years.
Unless there are significant supply disruptions or OPEC production cuts, lower oil prices may be necessary to stabilize the market after 2026, says Goldman.
“A year of upstream energy abundance lies ahead in 2026, but potential downstream bottlenecks may arise,” remarked Jarand Rystad, founder and CEO of Rystad Energy, in the firm's forecasts.
While supply waves may suppress primary energy prices, the more they decline in 2026, the stronger the rebound is expected to be in 2027 and 2028, Rystad pointed out.
Strong Refining Margins
The consultancy anticipates high refinery utilization rates and strong product crack spreads, particularly with “very high diesel crack spreads” in Europe and the U.S. likely to persist for most of 2026, which will enhance diesel margins in Asia and the Middle East as trade adjusts, according to Susan Bell, Senior Vice President of Commodity Markets – Oil.
Gasoline margins are also expected to remain robust as refiners aim to balance gasoline and diesel production, according to Rystad.
Resilient U.S. Shale
The intelligence firm expects U.S. shale production to remain robust, with WTI Crude prices around $60 per barrel.
Public companies are likely to maintain production levels to prevent declines and may choose to lower payout ratios, seeking operational synergies through mergers and acquisitions to manage full-cycle costs, according to Rystad’s Matthew Bernstein, Vice President of North America Oil & Gas.
Wood Mackenzie predicts that oil production in the Lower 48 states will stall in 2026 for the first time since the pandemic, although the Permian Basin will continue to be a critical source of U.S. oil supply.
For the first time, combined production from the Delaware Wolfcamp, Bone Spring, Midland Wolfcamp, and Midland Spraberry is expected to exceed 50% of total onshore U.S. oil output in 2026, based on WoodMac’s estimates.
The U.S. mergers market will increasingly focus on gas-heavy strategies, driven by rising gas demand due to increased LNG exports and a surge in electricity demand fueled by AI advancements.
International firms are also likely to seek U.S. gas assets to capitalize on growing domestic demand, hedging against LNG export volumes, and facilitating U.S. trade negotiations, according to WoodMac.
Tougher Strategic Balancing Act for Majors
U.S. gas markets may become a potential M&A hotspot, according to WoodMac’s corporate research directors Tom Ellacott and Greig Aitken.
In the upcoming year, major oil companies, national oil companies (NOCs), and independent operators in the U.S. and internationally will face an even greater challenge in strategic balancing compared to 2025.
Given the weak oil prices and oversupply, companies are preparing for lower prices in 2026 while remaining optimistic about their medium- to long-term prospects by reallocating capital from renewables to upstream oil and gas and exploring new frontiers in search of significant discoveries.
Companies are gearing up to navigate the oversupply in 2026, and buybacks might be one of the first areas to see cuts, according to WoodMac.
“Falling oil prices will necessitate deeper structural cost reductions and decreased buybacks. However, the pressure will increase to establish a stronger foundation for the next decade,” the analysts noted.
There will undoubtedly be many unpredictable factors in 2026, particularly in terms of geopolitics and tensions escalating from the Caribbean to Yemen. Although these elements are difficult to foresee, they will affect global energy markets and investor perceptions.
Among the trends that can be forecasted, the supply-demand dynamics in the oil and gas markets, along with the challenges and opportunities for major oil companies and other energy firms, will be crucial to monitor in 2026.
Oil and Gas Supply Waves
The current oversupply in the oil market is evident in the recent price fluctuations. Geopolitical events have caused short-term increases and decreases in oil prices, but these changes have been less dramatic than they would be in a tighter market.
The market is expected to have a surplus of up to 3.84 million barrels per day (bpd) by 2026, according to the latest IEA report from December.
Many analysts believe this oil surplus will not last long, predicting a market adjustment later in 2026 and into 2027.
Goldman Sachs noted in its Commodities Outlook 2026 that “While 2026 is the final year of the oil supply wave, the LNG supply wave will extend longer, with a forecasted rise in LNG exports of over 50% from 2025 to 2030.”
“Although our 2026 base scenario predicts excess oil supply, disruptions from Russia, Venezuela, and Iran pose significant risks, particularly as OPEC+ spare capacity diminishes,” wrote Goldman’s commodity research team in their December outlook.
According to the investment bank, supply waves will become the primary drivers of oil and natural gas prices in the coming years.
Unless there are significant supply disruptions or OPEC production cuts, lower oil prices may be necessary to stabilize the market after 2026, says Goldman.
“A year of upstream energy abundance lies ahead in 2026, but potential downstream bottlenecks may arise,” remarked Jarand Rystad, founder and CEO of Rystad Energy, in the firm's forecasts.
While supply waves may suppress primary energy prices, the more they decline in 2026, the stronger the rebound is expected to be in 2027 and 2028, Rystad pointed out.
Strong Refining Margins
The consultancy anticipates high refinery utilization rates and strong product crack spreads, particularly with “very high diesel crack spreads” in Europe and the U.S. likely to persist for most of 2026, which will enhance diesel margins in Asia and the Middle East as trade adjusts, according to Susan Bell, Senior Vice President of Commodity Markets – Oil.
Gasoline margins are also expected to remain robust as refiners aim to balance gasoline and diesel production, according to Rystad.
Resilient U.S. Shale
The intelligence firm expects U.S. shale production to remain robust, with WTI Crude prices around $60 per barrel.
Public companies are likely to maintain production levels to prevent declines and may choose to lower payout ratios, seeking operational synergies through mergers and acquisitions to manage full-cycle costs, according to Rystad’s Matthew Bernstein, Vice President of North America Oil & Gas.
Wood Mackenzie predicts that oil production in the Lower 48 states will stall in 2026 for the first time since the pandemic, although the Permian Basin will continue to be a critical source of U.S. oil supply.
For the first time, combined production from the Delaware Wolfcamp, Bone Spring, Midland Wolfcamp, and Midland Spraberry is expected to exceed 50% of total onshore U.S. oil output in 2026, based on WoodMac’s estimates.
The U.S. mergers market will increasingly focus on gas-heavy strategies, driven by rising gas demand due to increased LNG exports and a surge in electricity demand fueled by AI advancements.
International firms are also likely to seek U.S. gas assets to capitalize on growing domestic demand, hedging against LNG export volumes, and facilitating U.S. trade negotiations, according to WoodMac.
Tougher Strategic Balancing Act for Majors
U.S. gas markets may become a potential M&A hotspot, according to WoodMac’s corporate research directors Tom Ellacott and Greig Aitken.
In the upcoming year, major oil companies, national oil companies (NOCs), and independent operators in the U.S. and internationally will face an even greater challenge in strategic balancing compared to 2025.
Given the weak oil prices and oversupply, companies are preparing for lower prices in 2026 while remaining optimistic about their medium- to long-term prospects by reallocating capital from renewables to upstream oil and gas and exploring new frontiers in search of significant discoveries.
Companies are gearing up to navigate the oversupply in 2026, and buybacks might be one of the first areas to see cuts, according to WoodMac.
“Falling oil prices will necessitate deeper structural cost reductions and decreased buybacks. However, the pressure will increase to establish a stronger foundation for the next decade,” the analysts noted.