When the International Energy Agency issued its 2026 outlook on energy investment, it had a surprise for its audience, predicting a decline in oil investment, instead of an increase, as the current price environment would suggest. The IEA is not the only one making counterintuitive predictions. BMI just published a forecast on oil and gas spending this year, and it says the total will decline from 2025. Oil prices and investment trends are no longer in sync.

Spending on oil and gas globally is set to amount to $636 billion, BMI said in its report, noting this would represent a modest dip of 0.5% on 2025. Yet prices for both oil and gas are currently substantially higher than the 2025 average: $69 per barrel for Brent crude and a bit over $65 per barrel for West Texas Intermediate. Still, this has not really prompted plans for a surge in new investment.

One reason, of course, is uncertainty. With oil and gas prices becoming increasingly detached from the physical balance between demand and supply, and more dependent on social media posts by global leaders and trader moods, the energy industry has a much shorter horizon to the future than it did in the past. Climate-related policies also contribute to this uncertainty, further discouraging bold investment decisions.

Like other forecasters, BMI noted that despite the allure of higher prices, oil and gas producers had chosen to stick to financial discipline rather than going on a drilling rampage. Yet the market research agency noted that most of the investment to be made in oil and gas would focus on upstream projects, securing long-term supply from existing fields, aiming at high-certainty returns rather than taking big risks. Related: Solar Tops Coal in U.S. Power Mix for the First Month Ever

The war in the Middle East, according to BMI will take its toll on oil and gas investment, as some projects get delayed due to the hostilities. Over the longer term, however, the research firm sees a stable investment environment for oil and gas – reflecting similar expectations from other forecasters that have recently challenged the previously dominant narrative of an irreversible shift away from hydrocarbons and into wind, solar, and other alternative sources of energy.

The IEA had predicted in its report that energy investment globally was set to jump to $3.4 trillion this year, with $2.2 trillion expected to be spent on electricity, including grids, storage, nuclear, wind, solar, and efficiency. The balance of $1.2 trillion is, according to the IEA, to be poured into oil and gas, as well as coal.

Overall, the IEA sees oil and gas investment higher than BMI, at $500 billion for crude oil alone and another $330 billion in natural gas. The oil total, the IEA said, would be the third consecutive annual decline in investment, while the natural gas total would be a significant increase on 2025 and the highest in a decade.

Oil and gas investment decision-making, it seems, is becoming more cautious. Gone are the days of drill-at-will just because prices have moved higher. The new normal of financial-discipline-first is here to stay, wherever prices go. Yet even as total investments are forecast to decline, it is becoming increasingly clear that oil and gas will be around for much longer than many, including the IEA, have predicted. Just a couple of years ago, the IEA notoriously said that oil and gas demand would peak within four years, only to take it back last year, admitting that hydrocarbons will continue to power the world for decades, while net-zero businesses falter.

Indeed, as BMI noted in its investment report, Europe’s Big Oil majors who went all in on the energy transition, not least due to strong political pressures, are now reducing their exposure to low-carbon businesses as those fail to generate the expected returns. Europe’s supermajors, BMI said, are now focusing on cutting their own emissions rather than investing in large-scale ventures in low-carbon energy industries. U.S. supermajors, meanwhile, remain focused on their core business, which is oil and gas, in the shale patch and Guyana.

Asia, the forecaster said, is pursuing a long-term energy supply policy that will see oil and gas investments steady, while sub-Saharan Africa is expected to continue facing challenges because of the price environment uncertainty that makes investors reluctant to commit significant sums to new supply. That’s despite statements from some African countries’ governments that they are willing to get serious about developing their hydrocarbon resources, even as international financing institutions continue to pressure them into “leapfrogging” the West by going straight to wind and solar.

One thing appears certain, according to all forecasters: energy security is now top of the industry agenda, replacing emissions. The price trajectory may be uncertain, but securing sufficient energy sources is anything but—and this will likely continue driving investments across the board.

By Irina Slav for Oilprice.com

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