As oil prices top $100 per barrel (bbl), Wood Mackenzie, an energy intelligence group, has pinpointed the uptick in energy prices as the reason for the revival in windfall tax debate across four continents.

With windfall tax proposals in Brazil, the European Union (EU), the United States (U.S.), and Australia being triggered by higher oil prices pushing past $100 a barrel, a new Wood Mackenzie report warns that fiscal policy design has a long-term impact on Upstream investment and production, because prices have often already peaked by the time legislation, which politicians demand in the form of a windfall tax on energy companies, passes.

“The pace of legislative action is another problem. Designing and passing a windfall tax mechanism can take several months. Prices may have peaked by then. Many proposals are never implemented. Those that are, often raise far less revenue than governments initially projected,” outlined the energy intelligence player.

While Brazil introduced a temporary export tax in recent weeks and five EU member states campaigned for reinstatement of the 2022-23 solidarity contribution levy (SCL), U.S. senators relaunched a windfall tax bill targeting the largest oil producers and importers, and the Australian Senate debated a new gas export tax proposal.

The firm points out that Brazil’s export tax faces legal challenge, with cases related to its 2023 temporary tax still unresolved, and the EU’s 2022-23 SCL is subject to ongoing proceedings with ExxonMobil, while Algeria’s 2006 windfall tax went to international arbitration, which PSC contractors won after six years.

Wood Mackenzie underlines that the largest companies measure returns over decades, not months, and target relatively stability over time, with price spikes balanced by price crashes, but an unpredictable fiscal environment disrupts this.

The UK’s proposed oil and gas price mechanism (OGPM), due to replace the energy profits levy by 2030, applies only above $90/bbl for oil or GBP0.9 per therm ($12/mcf) for gas, and only on revenue above those thresholds. The firm deems it as predictable, elaborating that it can be built into investment models.

Multiple windfall tax episodes recurred throughout this century, with progressive taxes introduced in 2006-08 in Alaska, Algeria, China, Ecuador, Pakistan, and Venezuela. This was followed by India’s 2022 windfall tax, which changed its rate every two weeks before being abolished in December 2024.

There is also the UK’s energy profits levy, introduced in 2022, which has had its rate, timeframe, and allowances changed multiple times. The company claims that history shows the longer prices stay elevated, the more governments are expected to act.

WoodMac’s ‘May 2026 Fiscal Service’ report, drawing on its proprietary global database and analyses of upstream fiscal changes across more than 150 jurisdictions since 2002, finds some consistent patterns, as governments with flat tax rate systems are most likely to seek new windfall levies when prices surge.

On the other hand, governments with progressive fiscal systems, where the government’s revenue share moves automatically with prices, rarely need to. However, oil companies object strongly to fiscal disruption, and when it occurs, they question future investment in the affected sector.

Graham Kellas, SVP, Global fiscal research at Wood Mackenzie, commented: “The current debate is following a script we have seen before, and the major uncertainty is how long the price spike will last. In the current situation, that depends on how long supply disruption lasts and if there is any lasting damage.

“The longer prices stay elevated; the more governments are expected to act. The question is whether they can design something that works for the long term, or are they simply creating another measure that compounds future fiscal uncertainty?”

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