Five themes shaping the energy world in 2026

Strap in for another year of volatility with geopolitics influencing energy and natural resources markets as much as the fundamentals do.

In our forecasts, global GDP growth slows to 2.5% in 2026 from 2.8% last year as trade tariffs bite, adding to the inauspicious backdrop. However, the Fed’s ongoing rate cuts suggest 2026 may prove to be the low point of the cycle.

Oil: The OPEC+ strategy to dampen non-OPEC liquids supply by driving prices down is working. The market is awash with supply, with global liquids growth of 2.5 million b/d swamping demand growth of 0.7 million – even before any additional volumes from Venezuela.

Gas and LNG: The massive new wave of LNG supply, mainly from the US and Qatar, ramps up through 2026 and continues for several years. Delivered prices into Europe and Japan – already two-thirds down from the post-Ukraine war peak of 2022, at an average of US$12/mmbtu in 2025 – could halve again by the early 2030s.

Metals: Copper again looks the standout this year, with demand growth driven by electrification and supply disruptions continuing to buoy prices. Governments will step up efforts to secure access to critical minerals and consider building out domestic supply chains.

Energy affordability: power prices are now a political concern

Power demand is soaring on rampant AI investment and data centre build-out. Utilities have to invest to make the grid more resilient against wildfires and extreme weather events.

The risks to energy providers from the AI boom are becoming apparent – not least a breakthrough in chip efficiency, which could lead to overbuild and stranded assets a few years from now. That potential development will increasingly be at the centre of the debate in 2026.

Growth in investment stalls

Geopolitical tension and short-term weakness in commodity prices have led to a pause in the upward trend of investment in energy and natural resources. Having climbed by 41% since 2020 to reach a record US$1.63 trillion (real) last year, we forecast overall investment in energy and natural resources supply will slip by 4% to US$1.58 trillion (real terms) in 2026. Given the urgent need for sustained investment in supply to meet rising demand in the future and to decarbonise the energy system, we expect only a brief blip before investment resumes its upward trend.

M&A and corporate strategic positioning

Renewables: Diverging views on the outlook for US renewables in the wake of the Trump administration’s antipathy towards the sector will drive more M&A in the power sector. Companies are reassessing portfolio exposure. International and some domestic renewables players are aiming to cut exposure to US renewables.

Derisking will include developers shifting strategies from early-stage projects to more mature, cash-generating assets. A growing number of private equity companies that funded development platforms five to seven years ago will be seeking exits to return cash to their investors. Soaring valuations for existing combined-cycle gas turbine plants on the back of the data centre boom present a great opportunity for sellers. 

Oil and gas: Upstream companies will balance belt-tightening in a year of weak oil prices with expanding resource capture strategies. Success will require putting multiple levers into play – organic investment in new projects; strengthening exploration exposure, including high impact; international oil companies looking to access large-scale discovered resource (with Venezuela re-emerging as a potential option), partnering with national oil companies in some cases. M&A will be important in portfolio reloading and weak oil prices could present an opportunity for transformational corporate M&A.

Metals: Mining companies’ strategies have a similar duality, balancing continued dedication to capital discipline, which has worked well with investors, while strategically positioning for future metals demand growth. Diversified miners are eager to strengthen their portfolios by targeting the tier-one assets – low-cost mines of scale – though it’s doubtful deals would gain them the higher stock market ratings accorded to the purer players.

Decarbonisation bright spots

Yet despite deglobalisation and the difficult political and economic challenges governments face, there are bright spots in key sectors, with China leading the way on multiple fronts. Here’s where we expect to see more progress in 2026.

• Renewables: the world continues to install more renewables than new fossil-fuel-based power capacity. We expect global capacity of solar and wind to reach 4,000 GW in 2026, overtaking operating capacity of coal and gas-fired power capacity for the first time, albeit with output commensurate with lower capacity factors.
• Next-generation nuclear: we expect SMR nuclear projects to progress towards construction in 2026. Our pipeline shows a potential 6.7 GW capacity advancing towards FID in the next few years.
• Electric vehicles and batteries: global EV sales are expected to climb to 24 million in 2026, up 3.2 million units or 15% year-on-year. EVs now account for 26% of total light vehicle sales, up from 4% at the start of the decade, with China the driving force.
• Hydrogen: China’s developers FID’d over 70% of green hydrogen capacity last year, defying the negative sentiment elsewhere. Hydrogen’s low production costs in China could see its ammonia exports cracked back to hydrogen in Europe undercut green hydrogen production in the region.