New Delhi: Global oil and gas companies will scale back capital spending in 2026, with reinvestment rates averaging 50 per cent and shareholder distributions pegged at 45 per cent of operating cash flow, consultancy Wood Mackenzie has said in its Corporate Strategic Planner Oil and Gas 2026. The report projects Brent crude to average just under $60 a barrel in 2026.
“Oil and gas companies are caught between competing pressures as they plan for 2026. Near-term price downside risks clash with the need to extend hydrocarbon portfolios into the next decade. Meanwhile, shareholder return of capital and balance sheet discipline will constrain reinvestment rates,” said Tom Ellacott, senior vice president, corporate research at Wood Mackenzie.
Low-carbon spending faces deeper cuts
According to the report, European majors will limit renewable and low-carbon investments to 30 per cent of total budgets. Most international oil companies (IOCs) and national oil companies (NOCs) will converge at 10–20 per cent allocations. Capital allocation is expected to swing back towards upstream exploration and business development.
Flexible responses to market volatility
The analysis notes that buybacks will act as adjustable levers for companies. If Brent prices fall below $50 per barrel, most firms are likely to suspend share repurchases but protect base dividends. Investment programmes will be built with flexibility to allow rapid spending cuts in a low-price environment.
Cost cuts and efficiency focus
Structural cost reductions will remain a priority, with companies simplifying organisations, cutting headcount and deploying AI-enabled efficiency measures to boost margins and counter macroeconomic uncertainty.
Creative strategies for growth
Key investment themes identified include prospect hopper reloading for future exploration, opportunistic M&A to extend oil and gas portfolios, and vertical integration to unlock value.
“Some companies will need a more nimble and creative approach to business development to free up capital and build out next-decade portfolios,” said Neivan Boroujerdi, head of corporate NOC analysis at Wood Mackenzie. “A growing appetite for Discovered Resource Opportunities will trigger more NOC-IOC partnerships and strategic ventures to create win-win relationships.”
