Oil prices will fall below $50 a barrel before recovering.
Lower oil prices will fuel a consolidation wave in the sector.
Oil companies will turn to gas-fueled growth drivers like gas-fired power plants for AI data centers.
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Crude oil prices had a down year in 2025. Brent oil, the global benchmark price, was down nearly 20% on the year, falling from the mid-$70s (and a peak above $80) to the low $60s. Increasing global supplies and concerns about demand weighed on crude prices during the year.
The slump in oil prices that the industry experienced last year is likely to continue influencing the oil market in 2026. Here are three bold predictions on what might 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. Meanwhile, Goldman Sachs predicts Brent will decline to an average of $56 next year, with a downside to $51 if there’s a peace deal between Russia and Ukraine.
The main catalyst fueling these downbeat views is increased supplies. Several oil companies have recently completed or will complete major oil expansion projects in the coming months. Additionally, U.S. producers continue to increase their output in places like the Permian Basin. On top of that, OPEC has been steadily increasing its oil supplies. As a result, the world is on pace to experience a supply glut in 2026.
My prediction is that crude prices will crash below $50 a barrel at one point in the year. However, I expect that they’ll bounce off the bottom. I’d anticipate that OPEC would reduce its supplies in that scenario, while U.S. producers would likely lower their capital spending.
Lower oil prices tend to spur consolidation in the sector. A wave of mergers occurred in 2020 and 2021, following a decline in oil prices due to the pandemic. Additionally, there was another wave of mergers in late 2023, following a decline in crude prices from their war-fueled highs in 2022, after Russia’s invasion of Ukraine.
Oil giants ExxonMobil(NYSE: XOM) and Chevron(NYSE: CVX) have been active consolidators in recent years. Exxon acquired Denbury Resources for nearly $5 billion in late 2023 and finalized its $60 billion megadeal with Pioneer Natural Resources in May 2024. Meanwhile, Chevron bought PDC Energy for over $6 billion in 2023 and followed that up with its $55 billion mega deal for Hess, which it closed in July 2025 after initially agreeing to the deal in late 2023. Those deals will provide both oil giants with the fuel to continue growing their production and cash flow through 2030. However, given their financial strength, they’d likely pounce on an opportunity to bolster their operations if the right opportunity came along.
Additionally, I anticipate we’ll see more consolidation among smaller oil stocks in 2026. There are dozens of publicly traded independent exploration and production (E&P) companies in the U.S. I expect several of these companies will join forces to increase their scale to better weather lower oil prices.
While 2026 will likely be a down year for the oil market, it should be a much better year for natural gas stocks. Demand for the cleaner-burning fuel is growing due to the construction of new liquefied natural gas (LNG) export terminals 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 leading power producer NextEra Energy, which would combine gas generation with carbon capture and storage. They’re also looking to build a large data center on the site if they can secure a technology company customer 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, the associated data centers) funded by oil and gas companies. These investments would provide energy companies with another growth driver, which could produce steadier earnings compared to their core upstream oil and gas production operations.
Oil prices have declined over the past year, a trend I expect will continue in 2026. I predict that the slump will fuel another wave of mergers across the sector. It will also likely lead more oil companies to shift their focus to gas-fueled growth drivers, such as power plants and AI data centers. While lower crude prices will likely weigh on oil stock returns in 2026, the moves energy companies make to capitalize on the situation could set them up to produce high-octane total returns in 2027 and beyond.
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Matt DiLallo has positions in Chevron and NextEra Energy. The Motley Fool has positions in and recommends Chevron, Goldman Sachs Group, and NextEra Energy. The Motley Fool recommends Ge Vernova. The Motley Fool has a disclosure policy.
3 Bold Oil Market Predictions for 2026 was originally published by The Motley Fool
