Oil & Gas 2026

Overview

Global energy demand maintained its long-run upward trajectory through 2025, even as the pace and composition of growth shifted in response to technology, policy, and geopolitical forces. According to the IEA’s Global Energy Review 2026, total global energy demand grew by 1.3% in 2025 – a notable deceleration from the 2% recorded in 2024, attributable to slower growth in energy-intensive industries, cooler weather in key regions, and accelerating improvements in energy intensity. Yet the headline moderation masked powerful structural currents: global electricity demand grew approximately three times faster than total energy demand in 2025, and the IEA projected electricity consumption would increase at a brisk average annual rate of 3.6% through 2030, driven by industry, electric vehicles, air conditioning, and – most dramatically in the United States and other advanced economies – data centres.

In a historic first, solar PV contributed the largest single share of global primary energy demand growth in 2025, meeting more than one quarter of incremental demand – a milestone that signalled a genuine inflection in the energy system. Yet fossil fuels were far from a spent force: demand for oil, gas, and coal each grew in 2025, and the IEA’s Stated Policies Scenario did not see oil demand peaking until around 2030, at approximately 102 million barrels per day. Natural gas demand is booming. The EIA is projecting a 0.6% increase in oil demand in the United States between 2025 and 2027 and a 3.4% increase in natural gas over the same period. By the end of the decade, the EIA is projecting that natural gas will surpass oil as the leading source of energy production in the United States. The demand for natural gas has fuelled a surge in final investment decisions for new LNG projects, adding to an unprecedented 300 billion cubic metres of new annual export capacity scheduled to come online by 2030 – a 50% increase in available global LNG supply.

Against this backdrop, 2026 opened with a geopolitical shock of historic proportions. In late February, US and Israeli military operations against Iran triggered a cascade of events that the IEA described as the largest supply disruption in the history of the global oil market. Iran’s effective closure of the Strait of Hormuz – a chokepoint through which roughly 20% of the world’s seaborne oil trade and approximately 25% of global LNG exports normally passed – sent Brent crude surging past USD100 per barrel for the first time in four years, reaching a peak of USD126 per barrel in March. Global oil prices have moderated as hostilities have settled down, but the flashpoint in Iran highlighted to the world the fragility of the global hydrocarbon market. The implications for energy markets, transaction activity, and investment strategy are expected to be felt well into 2027 and beyond.

In the United States, the political environment for oil and gas underwent a pronounced shift. The Trump administration pursued deregulation, streamlined permitting, lifted the Biden-era pause on new LNG export authorisations, and signalled sustained support for domestic production. Capital continued to return to the sector: general investors who had retreated during the ESG-ascendant period rejoined the market, drawn in part by the surging power demand created by data centres and artificial intelligence infrastructure. Energy re-emerged as one of the strongest verticals for US IPOs, with listings roughly doubling between mid-2024 and mid-2026 as SEC reform proposals eased the path to public markets. The mega-merger wave that defined 2023–2024 gave way to a more selective environment, with consolidation continuing but competition for quality assets intensifying as the best opportunities diminished.

Despite the persistent growth in global oil and gas demand, energy companies increasingly participated in the broader energy transition by investing in alternative energy sources. The dual reality of rising hydrocarbon demand alongside accelerating clean energy deployment was not a contradiction but a reflection of the scale of global energy needs – and the extent to which an “all of the above” approach had become the dominant operating philosophy across governments, investors, and the industry itself.

Short-Term Trends

Commodity price uncertainty

The single most consequential near-term development in global energy markets was the disruption wrought by the 2026 conflict in the Middle East. The conflict coincided with historically low European gas storage levels following a harsh 2025–2026 winter, and a force majeure declaration by QatarEnergy raised the prospect of approximately 20% of global LNG being removed from the market. For oil and gas companies, the price spike was a double-edged development: while higher commodity prices flattered near-term revenues, the extreme uncertainty around forward strip pricing created a significant “wait and see” dynamic in the acquisition and divestiture market, with deals dependent on price assumptions two or three years out proving difficult to close.

Electricity demand surge

Underlying the geopolitical turbulence is a structural transformation in electricity demand that has reshaped the investment landscape. In the United States, electricity demand grew by more than 2% in 2025 – the second-fastest increase since 2000, excluding post-recession rebounds – with data centres alone accounting for approximately half of that growth. The implications for energy are profound: power requirements for data centres are driving demand for every reliable source of electricity – natural gas, nuclear, and geothermal among them – and are materially reshaping deal flow across the power and energy finance sectors. For oil and gas practitioners, natural gas-fired generation is increasingly relied upon to back up intermittent renewables, and transaction activity at the intersection of energy and digital infrastructure has become one of the most active areas of the market.

All of the above

Perhaps the most consequential shift in the energy debate over the past two years was the emergence of a global consensus around energy pluralism. The polarised framing that once pitted renewables against hydrocarbons gave way to a more pragmatic acknowledgement that meeting rising global demand – while maintaining energy security and managing the transition – requires all available sources. Russia’s invasion of Ukraine exposed the risks of energy monoculture; the 2026 Hormuz crisis reinforced the point with unusual force.

In the United States, the Trump administration’s “energy dominance” agenda explicitly embraced this pluralism: expanded LNG export capacity alongside continued support for nuclear and, pragmatically, renewables where they delivered reliability and cost efficiency. In Europe, the renewed energy security emergency of 2026 accelerated both investment in domestic renewables and long-term LNG supply contracts with the United States, Australia, and other non-Russian, non-Gulf producers. In emerging markets – which the IEA projected would account for nearly 80% of additional electricity consumption through 2030 – access to affordable and reliable energy in any form remained an urgent development priority. The “all of the above” framework had moved from political slogan to operational reality: oil and gas companies developing renewables capacity, utilities securing long-term gas contracts, and private equity active across the hydrocarbon spectrum even as it funded clean energy infrastructure.

Long-Term Trends

Social and government pressures

Concerns about the climate impact of fossil fuels continue to drive regulatory pressure and influence investment decisions across major markets. However, the events of 2022–2026 – from the Ukraine energy shock to the Hormuz crisis – have tempered some of this pressure, reinforcing the case for a more balanced approach that acknowledges the enduring importance of hydrocarbons. The policy environment varies considerably by jurisdiction: the Trump administration has rolled back a number of Biden-era climate and ESG-related rules, while European regulators continue to tighten emissions frameworks, requiring companies operating globally to navigate an increasingly divergent landscape.

Accelerating investment in energy transition

Significant capital continues to be deployed into the energy transition, including renewable power generation, battery storage, hydrogen, and carbon capture, utilisation, and storage (CCUS) technologies. The IEA’s data confirm that deployment of solar, wind, nuclear, electric vehicles, and heat pumps since 2019 now avoids more than 35 exajoules of annual fossil fuel demand – equivalent to approximately 7% of global fossil fuel use – and investment in electricity supply and end-use electrification now accounts for half of total global energy investment. In the United States, even though the current administration is clawing back certain of the Inflation Reduction Act’s clean energy incentives, the fundamental economics of solar and wind have improved to the point where investment continues regardless of policy tailwinds. The scale of investment required to meaningfully reduce hydrocarbon consumption across the global economy remains enormous, and the transition is widely expected to take decades.

Industry consolidation; exploration opportunities

Public companies continue to pursue consolidation to achieve synergies, reduce costs, and grow production without proportional capital expenditure. The mega-merger wave of 2023–2024 has given way to a more selective environment, but consolidation remains an enduring trend. Additionally, international companies – particularly from Asia and Europe – have aggressively been looking to make natural gas investments in the United States as part of a broader LNG strategy. The increased competition, along with fewer available Tier 1 assets, has led some US investors to begin looking internationally for opportunities, with Canada, Argentina, and other stable South American jurisdictions attracting growing interest from private capital. 

Access to capital

Large, investment-grade oil and gas companies retain broad access to debt and equity markets, while smaller companies continue to face greater challenges as some traditional lenders maintain reduced sector exposure. Alternative financing structures have become increasingly prevalent, most notably asset-backed securitisation (ABS): since the first oil and gas ABS transaction in 2019, the market has grown to encompass many billions of dollars in loans securitised against producing assets, with practitioners deploying ABS structures creatively, including as acquisition financing vehicles. Energy has re-emerged as a leading vertical for US IPOs, with listings roughly doubling between mid-2024 and mid-2026, supported by a favourable regulatory environment and strong institutional appetite driven in part by data centre-related power demand. The return of generalist investors to the sector – after a period of ESG-driven underweighting – has meaningfully expanded the capital available for energy transactions.

Global realignment

Russia’s invasion of Ukraine and the 2026 Middle East conflict served as an energy independence wake-up call to many nations. A geopolitical realignment of global energy markets has begun to emerge, but the landscape is complicated and evolving – especially in light of the United States’ intervention in Venezuela. More and more Russian oil and gas is flowing towards Asia, while LNG and oil exports from the United States are flowing to European and Asian allies. The long-term structural consequence is a continued fragmentation of global energy markets along geopolitical lines, with investment patterns and supply chains shaped as much by strategic considerations as by economics. The rapid expansion of US LNG infrastructure positions the United States to play an increasingly central role in global gas supply through the 2030s, while the withdrawal of Western capital from Russian energy assets continues to constrain that sector’s long-term output, and Chinese state entities have grown more selective about US energy investments in an environment of elevated bilateral friction.

Conclusion

The global oil and gas market in 2026 is defined by a fundamental paradox: underlying demand remains robust, long-term structural growth drivers – electrification, industrialisation in emerging markets, data centres – are intact and accelerating, and capital is returning to the sector with renewed conviction. Yet the near-term environment is one of exceptional uncertainty, shaped by a geopolitical conflict that produced the largest oil supply disruption on record and complicated the economics of transactions dependent on forward price assumptions. For practitioners navigating this landscape, the essential discipline is distinguishing between cyclical disruption and structural change – and positioning clients to capture the opportunities that the former creates while remaining aligned with the forces driving the latter.