Crude oil prices had a down year in 2025. Brent oil, the global benchmark, was down nearly 20% for the year, falling from the mid-70s (and a peak above $80) to a low of $60. Rising global supply and concerns over demand weighed on crude prices during the year.
The drop in oil prices that the industry experienced last year is expected to continue to influence the oil market in 2026. Here are three bold predictions for what could happen in the coming year.
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Most oil market forecasters have a bearish view on oil prices in 2026. For example, the U.S. Energy Information Administration expects Brent oil to average $55 per barrel in the first quarter of 2026 and remain near that level throughout the year. In the meantime, Goldman Sachs predicts Brent will fall to an average of $56 next year, with a downside has $51 if There is a peace agreement between Russia and Ukraine.
THE main The catalyst fueling these pessimistic views is heightened supplies. Several oil companies have recently completed or will complete major oil expansion projects in the coming months. In addition, American producers continue to increase their production in places likee the Permian Basin. In addition to that, OPEC has steadily increased its oil production supplies. As a result, the world is on track to experience oversupply in 2026.
I predict crude prices will fall below $50 per barrel at some point this year. However, I expect them to bounce back down. I would expect OPEC to reduce supplies in this scenario, while U.S. producers would likely reduce capital spending.
The fall in oil prices tends to stimulate consolidation in the sector. A wave of mergers occurred in 2020 and 2021, following the drop in oil prices due to the pandemic. Additionally, another wave of mergers took place in late 2023, following a drop in crude prices from their war-fueled highs in 2022, after The Russian invasion of Ukraine.
Oil giants ExxonMobilI And Chevron(NYSE: CVX) have been active consolidators in recent years. Exxon acquired Denbury Resources for nearly $5 billion in late 2023 and completed its $60 billion mega-deal with Pioneer Natural Resources in May 2024. Chevron bought PDC Energy for more than $6 billion in 2023 and followed up with its $55 billion mega-deal for Hess, which it closed in July 2025 after initially agreeing to the deal in late 2023. These deals will provide the two oil giants with the fuel to continue increasing their production and cash flow through 2030. However, given their financial strength, they would likely seize the opportunity to strengthen their operations if the right opportunity presented itself.
Additionally, I anticipate we will see greater consolidation among smaller oil stocks in 2026. There are dozens of independent, publicly traded exploration and production (E&P) companies in the United States. I expect many of these companies to do so. join forces to increase their scale has better weather report drop in oil prices.
While 2026 will probably a down year for the oil market, this should be a a lot best year for natural gas actions. Demand for this cleaner fuel is increasing due to the construction of new liquefied natural gas Export terminals (LNG) and AI data centers.
Several energy companies are evaluating opportunities to invest directly in gas-fired power plants and data centers. For example, ExxonMobil is developing a 1.2 gigawatt power plant in collaboration with the major electricity producer. NextEra Energywhich would combine gas production with carbon capture and storage. They also plan to build a large data center on the site if they can find a technology company client for the facility. Meanwhile, Chevron has partnered with gas turbine maker GE Vernova and investment firm Engine No. 1 to build gas-fired power plants for data centers.
I predict that 2026 will be a big year for gas-fired power plant projects (and in some cases, associated data centers) funded by oil and gas companies. These investments would provide energy companies with another growth engine, which could generate more stable profits relative to their core business. upstream oil and gas production operations.
Oil prices have fallen over the past year, a trend that is expected to continue into 2026. I predict the crisis will fuel a new wave of mergers in the sector. It will also likely lead more oil companies to focus on gas-fueled growth engines, such as power plants and AI data centers. Although falling crude prices will likely weigh on oil stock returns in 2026, moves by energy companies to take advantage of the situation could set them up to produce strong total returns in 2027 and beyond.
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Matt Dilallo holds positions in Chevron and NextEra Energy. The Motley Fool holds positions and recommends Chevron, Goldman Sachs Group and NextEra Energy. The Motley Fool recommends Ge Vernova. The Mad Motley has a disclosure policy.
