This year has seen a resurgence in M&A after several subdued years, but if the narrative of persistently weaker oil prices in 2026 becomes reality, this dynamic will weigh on valuations and investment ambitions. Lower oil prices next year are likely to sap appetite for aggressive M&A expansion in the hydrocarbons industry, although rapid growth in gas demand will encourage companies to pursue growth there.
With supply potentially outstripping demand in 2026, falling Brent crude oil prices could dampen M&A activity in the oil sector, Bracewell’s Eimear Murphy told Petroleum Economist.
“Brent at around $55/bl does not support aggressive expansion,” Murphy said.
Lower oil prices could also lead to an increase in disputes across the sector, Bracewell’s Alistair Calvert added.
“Newer and smaller players are competing over a shrinking pool of desirable assets, and that leads to disputes and is likely to continue to do so,” Calvert said. “The predicted fall in oil prices in 2026 will only increase that pressure. For some, long-term contractual commitments may start to look less attractive, for others they will look more attractive, and disputes follow that.”
Bracewell’s François Feuillat noted that because many private-equity-owned oil and gas assets were acquired before 2020 at higher prices, some investors may have to divest and take losses.
“I would expect there at some point to be a very big shakeout of the assets owned by private equity and that there will be a bunch of fire sales at some point, when either insolvencies or these requirements of private equity funds to hand money back to investors will happen,” Feuillat said. “Whether that will be next year or later, it is very hard to tell.”
Meanwhile, Africa continues to see significant upstream M&A activity, driven largely by portfolio management by major oil companies, Bracewell’s Adam Blythe said.
“What these deals continue to demonstrate is that Nigerian indigenous companies now have the financial and technical muscle to embark on huge transactions,” Blythe said, adding he expected the trend to continue into 2026.
