The global upstream oil industry is once again facing a downturn, with predictions indicating that capital expenditure will decline even further in 2026, driven by persistently low oil prices. But here’s where it gets controversial... While many focus on the risks of declining investment, some regions like Africa, Latin America, and the Middle East might buck the trend and increase spending, complicating the global supply picture.
Last year, investment in upstream oil exploration and production appeared to shrink by approximately 2.5%, falling to around $420 billion. This slowdown was primarily caused by low crude prices, which dampened enthusiasm among oil producers and led them to prioritize maintaining profitability, generating free cash flow, and reducing debt instead of aggressively increasing output. The macroeconomic environment—uncertainties in global markets—also played a significant role in tempering expansion plans. The decline was particularly notable among U.S. independent producers specializing in light tight oil and shale, who scaled back their investments. However, national oil companies (NOCs) in the Middle East maintained or even increased their spending, and traditional, conventional projects proved somewhat more resilient to the downturn.
Now, industry experts from Wood Mackenzie are warning that these trends are set to persist in 2026. They forecast that global upstream sector spending will drop for a second consecutive year, with budgets likely shrinking by at least 2-3% compared to the previous year. In fact, total capital expenditure could decrease by over 5% when compared to 2024 levels. This contraction is driven by ongoing low oil prices, which are expected to stay below $60 per barrel. Despite the downward pressure, some regions will see growth—namely Africa, Latin America, and the Middle East—while North America and Europe will likely reduce their investments.
Even amid these investment cuts, global supplies of non-OPEC liquids and natural gas are projected to grow slightly, each by approximately 1.5%. The key drivers of this growth in non-OPEC oil production are expected to be Brazil, Guyana, and Argentina, which together could contribute about half of an estimated 0.8 million barrels per day increase in 2026. The U.S. Energy Information Administration (EIA) predicts this combined increase. For Brazil, this growth is largely attributable to the commencement of new offshore pre-salt projects, including the start-up of Equinor’s Bacalhau field in October and two additional FPSOs (Floating Production Storage and Offloading units) operated by Petrobras in December. The EIA forecasts Brazil’s oil output to rise by 200,000 barrels per day to reach 4 million barrels daily in 2026.
In Guyana, the rapid development of the Stabroek Block, led by Exxon Mobil and its partners, has caused production to surge beyond previous expectations, potentially exceeding 1 million barrels daily once new floating production platforms such as Yellowtail, Uaru, and Whiptail come into full operation. Already, Exxon’s Yellowtail project is fully operational, boosting Guyana’s production to over 900,000 barrels per day. The country is increasingly exporting its crude mainly to Asian markets. Furthermore, the upcoming Uaru project is projected to add another 250,000 barrels daily, pushing Guyana’s total output past 1 million barrels per day by 2027.
Argentina is also expected to see notable growth, driven primarily by its vast Vaca Muerta shale formation. The EIA anticipates that Argentina’s oil production will average around 810,000 barrels per day in 2026, an increase from 740,000 in 2025 and 670,000 in 2024. These figures highlight the country’s emerging role as a significant non-OPEC oil producer.
Looking further ahead, research firm Rystad Energy predicts that offshore oil fields in Brazil, Guyana, Suriname, and Argentina’s Vaca Muerta will remain crucial, offering competitively priced non-OPEC supply through 2030. They estimate that world liquids demand will peak during the 2030s at approximately 107 million barrels per day, maintaining a high plateau above 100 million bpd into the 2040s, only to gradually decline to around 75 million bpd by 2050. Rystad suggests that non-OPEC+ sources will be vital for balancing the global market, with affordable oil from South America helping offset slower growth in U.S. shale production. Specifically, non-OPEC+ projects are expected to contribute about 5.9 million barrels per day—almost 60% of new hydrocarbons being developed through 2030. South America alone could contribute around 560,000 bpd of new supply, while North America might add roughly 480,000 bpd.
Meanwhile, the EIA forecasts a slight decline in U.S. oil production in 2026, with output averaging approximately 13.5 million barrels daily—a drop of about 100,000 barrels compared to 2025. This stagnation reflects a plateauing of U.S. production, as increased yields from the Permian Basin, Alaska, and the Gulf of Mexico are offset by declines elsewhere, influenced by lower oil prices and a global oversupply.
On the gas front, Wood Mackenzie projects a 7% increase in worldwide natural gas spending in 2026, even as overall oil investments shrink. This growth is largely driven by new liquefied natural gas (LNG) projects coming online in regions like the United States, Canada, and Qatar, which will boost both supply and demand. Industry analysts, including Wood Mackenzie and Fitch Ratings, generally agree that companies will stay disciplined with their capital spending in 2026, focusing on managing volatility and oversupply concerns. As a result, total upstream investments from the world’s seven largest oil companies are expected to remain relatively steady with previous years.
In conclusion, while the industry faces challenges ahead due to low oil prices and cautious spending, certain regions and projects are poised to continue growth, shaping the global energy landscape in complex and unpredictable ways. The question remains: Will the shift towards more judicious investment and the rise of non-OPEC producers fundamentally alter the global oil balance, or will new surprises emerge that could reshape this outlook? Share your thoughts—are we on the brink of a sustainable energy renaissance, or is the industry simply treading water amidst uncertainty?
