Supermajors to rein in buybacks if oil stays below $70
Lower oil prices are eroding profit margins of global oil and gas companies, forcing deeper structural cost cuts and threatening share buyback programs. If oil prices stay below $70 per barrel, supermajors’ free cash flow could plunge by up to 30 percent in 2026, Wood Mackenzie forecasts.
Brent’s flirt with contango could make OPEC+ cut supply
If the Brent crude oil market begins to “flirt with contango,” OPEC+ will likely cut production, Rystad reckons. The primary goal of oil and gas producers remains maintaining a backwardated market structure, with crude prices impacting oil-indexed gas and LNG contracts.
Blue hydrogen, ammonia gain traction as rival fuels to LNG
2025 will see hydrogen gain traction as an alternative – potentially rival – fuel to LNG as the U.S. will become the leader in blue hydrogen production, while electrolysers made-in-China drive competition and spur investments in ammonia. Addressing the mismatch between FIDs and offtake contracts will, however, be crucial to scaling hydrogen for power generation and as a fuel for shipping.
Asia-Pacific oil producers prioritize natural gas investments
CAPEX intensity of oil & gas producers in Asia-Pacific stays high, driven by upstream spending and energy-transition initiatives which makes producers prioritize investment in natural gas and LNG. According to Fitch Ratings, oil prices will retreat to mid-cycle levels by 2026, while earnings are bolstered by up to 15% growth in production volumes.
