{"id":348165,"date":"2025-09-29T01:18:04","date_gmt":"2025-09-29T00:18:04","guid":{"rendered":"https:\/\/www.thetidenewsonline.com\/?p=348165"},"modified":"2025-09-28T16:19:15","modified_gmt":"2025-09-28T15:19:15","slug":"industry-braces-for-glut-and-investor-demands","status":"publish","type":"post","link":"https:\/\/www.thetidenewsonline.com\/?p=348165","title":{"rendered":"Industry Braces For Glut And Investor Demands"},"content":{"rendered":"<div dir=\"auto\">The oil and gas industry is in for a tough year ahead, as it must balance financial discipline, shareholder returns, and long-term investments in the sustainability of the business\u2014while navigating a hypothetical glut.<\/div>\n<div dir=\"auto\"><\/div>\n<div dir=\"auto\">The warning comes from Wood Mackenzie, which said in a new report that the industry was faced with conflicting trends over the next year that would make decision-making challenging. Among these is an expectation that the market would tip into an oversupply, pressuring prices, while the demand outlook for oil over the long term brightens up, motivating more investments.<\/div>\n<div dir=\"auto\"><\/div>\n<div dir=\"auto\">\u201cOil and gas companies are caught between competing pressures as they plan for 2026. Near-term price downside risks clash with the need to extend hydrocarbon portfolios into the next decade. Meanwhile, shareholder return of capital and balance sheet discipline will constrain reinvestment rates,\u201d Wood Mackenzie\u2019s senior vice president of corporate research, Tom Ellacott, said.<\/div>\n<div dir=\"auto\"><\/div>\n<div dir=\"auto\">The executive added that investors would also influence decisions, as they continue to prioritize short-term returns over long-term investments. This last part, at least, is not unusual in the current investment environment across industries. It could, however, make life even more difficult for oil and gas companies for a while.<\/div>\n<div dir=\"auto\"><\/div>\n<div dir=\"auto\">The glut that Wood Mackenzie analysts expect is the same glut that the International Energy Agency has been expecting for a while now. Yet that very same International Energy Agency earlier this month issued a warning on the longer-term security of global oil supply, saying the industry needed to step up investment in new production because natural depletion at mature fields was progressing faster than previously assumed.<\/div>\n<div dir=\"auto\"><\/div>\n<div dir=\"auto\">Per the report, if the industry has to maintain current levels of oil and gas production, more than 45 million barrels per day of oil and around 2,000 billion cu m of natural gas would be needed in 2050 from new conventional fields. It\u2019s worth noting that this is maintenance of current production levels, assuming demand will not rise, which is a risky assumption.<\/div>\n<div dir=\"auto\"><\/div>\n<div dir=\"auto\">Even with projects ramping up and new ones approved for development and not yet in production, a large gap still exists \u201cthat would need to be filled by new conventional oil and gas projects to maintain production at current levels, although the amounts needed could be reduced if oil and gas demand were to come down,\u201d the IEA said.<\/div>\n<div dir=\"auto\"><\/div>\n<div dir=\"auto\">However, demand could just as well increase, heightening the degree of uncertainty in the industry and making long-term planning even more challenging\u2014especially for companies with higher debt-to-equity ratios. Wood Mackenzie expects those with gearing of above 35% would prioritise resilience over long-term growth, while those with better debt positions would turn to divestments and asset acquisitions to improve the quality of their portfolio.<\/div>\n<div dir=\"auto\"><\/div>\n<div dir=\"auto\">Share buybacks will also remain on the oil industry\u2019s table as a favorite tool for making shareholders happy, although, Wood Mac notes, these tend to dry up when oil slips below $50 per barrel. Interestingly, the analytics company does not seem to factor into its analysis a scenario where prices might go up instead of down, especially now that President Trump has signaled he would be willing to step up pressure on Russia to bring a swifter end to the war in Ukraine.<\/div>\n<div dir=\"auto\"><\/div>\n<div dir=\"auto\">If prices do rise, for whatever reason, including failure of the massive 3-million-bpd glut that the IEA predicted to materialize, then the immediate outlook for the oil and gas industry becomes different\u2014but not too different. Companies have already demonstrated they would not return to their old ways of splurging when times were good and tightening belts when times were bad. They would likely stick to spending caution and shareholder return prioritization, regardless of prices.<\/div>\n<div dir=\"auto\"><\/div>\n<div dir=\"auto\">By Irina Slav<\/div>\n","protected":false},"excerpt":{"rendered":"<p>The oil and gas industry is in for a tough year ahead, as it must balance financial discipline, shareholder returns, and long-term investments in the sustainability of the business\u2014while navigating a hypothetical glut. The warning comes from Wood Mackenzie, which said in a new report that the industry was faced with conflicting trends over the [&hellip;]<\/p>\n","protected":false},"author":67315,"featured_media":348191,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-348165","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-city-crime"],"_links":{"self":[{"href":"https:\/\/www.thetidenewsonline.com\/index.php?rest_route=\/wp\/v2\/posts\/348165","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.thetidenewsonline.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.thetidenewsonline.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.thetidenewsonline.com\/index.php?rest_route=\/wp\/v2\/users\/67315"}],"replies":[{"embeddable":true,"href":"https:\/\/www.thetidenewsonline.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=348165"}],"version-history":[{"count":1,"href":"https:\/\/www.thetidenewsonline.com\/index.php?rest_route=\/wp\/v2\/posts\/348165\/revisions"}],"predecessor-version":[{"id":348201,"href":"https:\/\/www.thetidenewsonline.com\/index.php?rest_route=\/wp\/v2\/posts\/348165\/revisions\/348201"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.thetidenewsonline.com\/index.php?rest_route=\/wp\/v2\/media\/348191"}],"wp:attachment":[{"href":"https:\/\/www.thetidenewsonline.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=348165"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.thetidenewsonline.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=348165"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.thetidenewsonline.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=348165"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}