Most global oil and gas companies are entering the period of oversupply with strong balance sheets and disciplined capex, focused on short-cycle oil, selective LNG and targeted low-carbon projects. This supports the ‘neutral’ sector outlook for 2026, Fitch Ratings says.

We assume the Brent oil price will reduce to about USD63/barrel (bbl) in 2026, from USD69/bbl in 2025. Global oil supply has expanded substantially in 2025, and will increase further in 2026. The oil market will remain oversupplied as production growth – in both OPEC+ and non-OPEC+ countries – will continue to outpace demand growth in 2026, and the late-2025 ‘oil on water’ wave is likely to move onshore, which could pressure prices if stock builds occur in price-sensitive hubs such as the US and Europe.

The energy transition is slowing as some governments increase their support for hydrocarbon-based energy, notably in the US. However, we expect only-moderate global oil demand growth in 2026, given slower economic growth, a very weak petrochemicals sector, efficiency improvements and rising electric-vehicle adoption.

Refining margins are likely to remain supportive in 2026. Growth in new capacity additions is tapering, and Russian refining capacity availability is still uncertain. Tight middle-distillate balances and improved sour-crude economics in Asia will support margins, while petrol cracks are softening on weak demand.

We expect a lower average European Title Transfer Facility (TTF) natural gas price of USD9/mcf in 2026 (2025: USD12/mcf). Increased LNG availability will drive this decline, reflecting new liquefaction projects mainly in the US, Qatar and Canada.

We assume US Henry Hub prices will remain fairly high in 2026, no change from 2025. We now expect storage levels to approach the high-end of the five-year range by end-2025 after strong production growth in the second half of the year. Another 6 billion cubic feet per day of natural-gas liquefaction capacity is likely to come online from 2026 to 2029. There is some risk to our 2026 price assumption due to the volatility of winter weather, growing storage levels and uncertainty about producer discipline.

We expect oilfield services to deliver mixed performance. Verticals directly exposed to the exploration and development budgets of upstream producers may face weaker pricing due to declining oil and natural gas prices, continued cost discipline from upstream producers and uncertainty about global upstream activity levels. Services verticals that cater to the ongoing operations of producing assets will be less affected.

Most Fitch-rated issuers in the sector have strong balance sheets. We forecast median EBITDA net leverage to remain generally flat over 2024-2027, with a slight increase of 0.1x in 2026 on lower oil prices. We expect stronger EBITDA and FCF margins in 2026 than in 2025 on disciplined cost and capex management.

We believe global oil and gas companies are well prepared to withstand oil and gas price volatility. Capex reduction and operating-cost optimisation will be key in the event of a weaker macroeconomic backdrop, as will lower shareholder distributions and selective disposals, particularly among larger investment-grade issuers with broad asset bases. Liquidity remains a key consideration for high-yield issuers when macroeconomic conditions deteriorate.
Source: Fitch Ratings