Iran Energy News Oil, Gas, Petrochemical and Energy Field Specialized Channel
Related Articles
Several trends emerged in the energy markets in 2025 and are set to continue shaping the global oil, gas, and energy equities markets into 2026.
Sure, there will be many wild cards in 2026, especially concerning geopolitics and tensions flaring up from the Caribbean to Yemen. These, while impossible to predict, will also impact global energy markets and investor sentiment.
Of those trends that can be predicted, supply-demand balances in the oil and gas markets, and the challenges and opportunities facing Big Oil and other oil and gas firms, will be key to watch in 2026.
Oil and Gas Supply Waves
The oil market oversupply is here, evident in the price swings in both directions in recent weeks. Geopolitical developments have moved oil up or down, but the hikes and dips have been short-lived and smaller than they would have been if the market were tight or balanced.
The market is headed to as much as 3.84 million barrels per day (bpd) of supply exceeding demand in 2026, the IEA said in its latest monthly report for December.
The oil glut will be short-lived, many analysts say, and they expect the market to start balancing later in 2026 and into 2027.
Goldman Sachs, for example, said in its Commodities Outlook 2026 that “While 2026 is the last year of the oil supply wave, the LNG supply wave is much longer with a predicted surge in LNG exports of over 50% in 2025-2030.”
“While our 2026 base case is excess oil supply, disruptions from Russia, Venezuela, and Iran are risks to watch, especially with a moderation in OPEC+ spare capacity,” Goldman’s commodity research analysts wrote in the outlook published in December.
Over the next few years, supply waves will be the main driver of oil and natural gas prices, the investment bank reckons.
Barring large supply disruptions or OPEC production cuts, lower oil prices will likely be required to rebalance the market after 2026, Goldman says.
“A year of upstream energy abundance lies in store in 2026, but with potential bottlenecks downstream,” Jarand Rystad, founder and CEO at Rystad Energy, said in the intelligence firm’s predictions.
The supply waves would depress primary energy prices, but the deeper primary energy prices fall in 2026, the more they will rebound in 2027 and 2028, Rystad noted.
Strong Refining Margins
The consultancy also expects high refinery utilization rates and elevated product crack spreads, with “very high diesel crack spreads” in Europe and the U.S. likely to persist through most of 2026, supporting stronger diesel margins in Asia and the Middle East as trade flows adjust, said Susan Bell, Senior Vice President, Commodity Markets – Oil.
Gasoline margins are also set to be supported as refiners seek to balance gasoline and diesel output, according to Rystad.
Resilient U.S. Shale
The intelligence firm expects U.S. shale output to prove resilient again, at WTI Crude prices at about $60 per barrel.
Public companies are set to defend maintenance production to avoid an outright decline and could opt for lowering payout ratios, hoping to gain operational and overhead synergies from M&A activity to offset full-cycle costs, according to Rystad’s Matthew Bernstein, Vice President, North America Oil & Gas.
Wood Mackenzie expects Lower 48 oil production to stall in 2026 for the first time since the pandemic. However, the Permian remains the powerhouse of U.S. oil supply.
For the first time ever, combined production from the Delaware Wolfcamp, Bone Spring, Midland Wolfcamp, and Midland Spraberry will account for more than 50% of total onshore U.S. oil output in 2026, per WoodMac’s estimates.
The U.S. mergers market will shift to gas-weighted plays with gas demand soaring due to hikes in LNG exports and demand for power generation amid the AI-led growth in electricity demand.
International players will also be on the lookout for U.S. gas assets to take advantage of rising U.S. demand, physical hedges against LNG export volumes, and tools to help progress U.S. trade negotiations, WoodMac reckons.
Tougher Strategic Balancing Act for Majors
U.S. gas plays could emerge as a potential M&A hotspot, WoodMac’s corporate research directors Tom Ellacott and Greig Aitken said in an outlook of corporate themes for 2026.
In the year ahead, Big Oil, the national oil companies (NOCs), and the U.S. and international independents will face an even tougher strategic balancing act than in 2025, they said.
In light of muted oil prices and oversupply, companies are bracing themselves for lower prices in 2026, but they are more optimistic about their medium and long-term prospects as they shift capital from renewables to upstream oil and gas and are venturing into frontier exploration in the hope of finding the next elephant discovery.
Companies are getting ready to weather the glut in 2026, and buybacks could be trimmed first, WoodMac reckons.
“Lower oil prices will force more structural cost reductions and cuts to buybacks. But the pressure will intensify to lay stronger foundations for next decade,” the analysts noted.
