Energy markets enter 2026 in a subdued mood, with geopolitical uncertainty clouding the outlook and growing signs of oil and gas supply expansion threatening prices. It’s been a tumultuous year for the oil and gas industry, which saw the 12-day Israel-Iran war in June, US President Donald Trump’s trade war, increased targeting of Russia’s energy infrastructure in its war against Ukraine, OPEC’s often baffling production decisions, and recent threats. US blockade of Venezuela.
So, what does next year have in store? Here are five trends that could shape the energy landscape in 2026 and beyond.
Year of gluttony?
Investors will remain keenly aware of signs that crude oil inventories will swell next year, after oil prices fell nearly 20% to about $60 a barrel in 2025 on fears of a huge oversupply.
Global oil production has soared over the past year. The United States, the world’s largest oil producer, increased production, as did Canada and Brazil, while the Organization of the Petroleum Exporting Countries and its allies, including Russia, known as OPEC+, reversed years of production cuts.
The International Energy Agency predicts that supply will exceed demand by a staggering 3.85 million barrels per day (bpd) in 2026. This corresponds to approximately 4% of global demand.
But OPEC analysts believe the market will be mostly balanced next year, with the sharpest divergence in forecasts in decades. Since April, China has been stockpiling large amounts of crude oil, further increasing uncertainty about the supply-demand balance. Reuters calculations estimate the volumes to be significant, around 500,000 barrels a day, but traders have limited information about these quantities.
In the end, the IEA is likely to be proven right. Oil transported or stored in tankers has increased in recent weeks, reaching its highest level since April 2020, when consumption plummeted during COVID-19 lockdowns, according to Kpler data. This increase in offshore inventories suggests that onshore inventories may soon begin to fill up, putting further downward pressure on prices.
The LNG wave is coming
Demand for liquefied natural gas has surged in recent years, particularly as Europe seeks to rapidly replace Russian pipeline gas, which it imported in large quantities ahead of the Russian military’s invasion of Ukraine in 2022.
This boom has brought huge profits to LNG producers and traders, but that may no longer be the case as global export capacity increases.
According to the IEA, from 2025 to 2030, new LNG export capacity is expected to increase by 300 billion cubic meters per year, an increase of 50%, with about 45% of that coming from the United States, the world’s largest exporter of the fuel.
Supply over the same period will outpace demand growth, squeezing producer profits and providing some reassurance to consumers in Europe and Asia. Rising U.S. natural gas prices are creating new headaches for producers.
Still, producers have reason to be optimistic. As LNG prices fall from 2026 onwards, this power source will become increasingly competitive with lower-cost alternatives such as oil and coal, potentially increasing demand for supercooled fuels.
Excellent diesel performance continues
Diesel margins have been rising this year and gaining momentum in the past six months as refined products markets face supply constraints even as the world is increasingly awash in crude oil.
Benchmark European diesel refining margins rose 30% in 2025, compared with a 20% decline in Brent crude oil prices in 2025, according to LSEG data. This is mainly due to a series of Ukrainian drone attacks on Russian refineries and oil terminals, a decline in diesel exports in the second half of 2025, and the EU’s decision to ban imports of fuel made from Russian crude oil.
This trend is expected to continue through 2026, as relatively little new refining capacity is coming online. A peace deal in Ukraine would change the calculus, but would likely provide only limited relief.
Big oil hopes for bright future
Oil and gas companies are bracing for strong headwinds in 2026. Chevron, ExxonMobil and Total Energy have all slashed their spending plans for next year by about 10% and announced significant cost cuts. At the same time, the oil majors appear to be quite bullish about their long-term prospects. They are spending more money on exploration and investment in new projects that will come online later this decade or in the early 2030s. Major oil producers in the Middle East, such as Saudi Arabia and the United Arab Emirates, are also preparing for a new era of upstream investment.
This long-term bullishness could lead Western oil majors (most of which boast strong balance sheets and relatively low debt, but BP is a notable exception) to try to take advantage of the expected 2026 recession to cannibalize their struggling rivals.
Renewable energy is declining, but not disappearing
In October, the IEA cut its forecast for global renewable power growth to 2030 by a fifth, or 248 gigawatts, compared to last year’s forecast, citing weaker prospects for the United States and China. Global renewable energy capacity is expected to increase by 4,600 GW by 2030, with solar power accounting for approximately 80% of the increase.
Still, electricity demand is expected to grow by 4% annually by 2027, driven by power-hungry data centers and widespread electrification of the economy, even as governments and businesses may delay energy transition plans in the name of energy security.
This tension will continue to dominate global electricity markets beyond 2026, especially as the costs of solar power, wind power, and battery storage are expected to continue falling.
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(Edited by Ron Busso: Margherita Choi)
