Wall Street’s top six banks have sharply reduced fossil fuel financing in 2025, cutting total oil, gas, and coal lending by 25% year-to-date to $73 billion, according to data compiled by Bloomberg through August 1. The largest cut came from Morgan Stanley, which slashed lending by 54%, while JPMorgan Chase posted the smallest reduction at around 7%. Wells Fargo, despite paring back by 17%, remained the largest lender with $19.1 billion in fossil financing.
The downturn comes amid the first projected decline in global upstream investment since the pandemic, with U.S. deal volumes particularly affected by shale inventory exhaustion, price volatility, and widening valuation gaps. Recent industry data shows that upstream M&A activity has dropped sharply, with global transaction value down 34% in the first half of the year, Bloomberg reported.
Analysts note that the exodus from the Net-Zero Banking Alliance by major U.S. institutions following President Trump’s reelection was driven more by political signaling than actual portfolio shifts. Still, the decline in fossil lending suggests that market risk, not emissions targets, is driving strategy.
Industry-wide deal activity has been deteriorating beyond just Wall Street’s financing shift.
Global upstream M&A fell 34% in the first half of 2025 compared to the previous year, as buyers grew more cautious amid asset price inflation and declining reserve quality. U.S. shale transactions have slowed sharply, with private equity sellers facing fewer competitive bids and public E&Ps prioritizing capital discipline over acreage growth.
Sector analysts note that oil price volatility, elevated valuations, and a thinning pipeline of viable targets have all contributed to the deal slowdown, particularly for unconventional assets in the Permian and Eagle Ford. Several prospective transactions were reportedly shelved in Q2 due to widening bid-ask spreads and persistent market uncertainty. The current environment marks a stark contrast to the consolidation wave of 2023, when majors and independents aggressively pursued scale and inventory depth.
By Charles Kennedy for Oilprice.com
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