Wood Mackenzie projects $495 billion windfall for upstream sector in 2026 at $90 oil
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Wood Mackenzie now estimates that the global upstream oil and gas sector could generate $495 billion in free cash flow in 2026 if crude averages $90 per barrel, more than doubling its previous forecast based on $60 oil. The revision follows the sharp jump in crude prices triggered by the Middle East conflict, with the 49 national and international oil companies covered by the consultancy expected to capture $272 billion of that total.
Windfall Projections
Wood Mackenzie’s revised forecast shows global upstream free cash flow could reach $495 billion in 2026 if Brent averages $90 per barrel, more than double the $60-per-barrel base case. The conflict in the Middle East is expected to reduce global oil output by at least 3%, with Iraq alone losing roughly 3 million barrels per day of production. Qatar’s damaged infrastructure may cut global LNG supply by 2%. Among 155 tracked companies, the largest 49 firms are projected to capture $272 billion of the windfall.
Capital Discipline
Despite the influx of cash, Wood Mackenzie expects energy companies to maintain capital discipline, with capex budgets largely flat and share buybacks declining by 5%. Boards are prioritizing balance sheet strength and debt reduction over immediate shareholder returns. Tom Ellacott, Senior VP of Corporate Research at WoodMac, noted that most players have adopted a wait-and-see approach, preferring to accumulate cash rather than increase investment. Capital discipline has proved more durable than expected.
M&A Activity
Excess cash is flowing into upstream M&A, which surged to a two-year high in the first half of 2026. Notable deals include Shell’s $16 billion acquisition of ARC Resources, Devon’s $25 billion merger with Coterra, and Mitsubishi’s $7.5 billion purchase of Aethon. Dealmakers are prioritizing stable, low-cost regions and natural gas/LNG assets to ensure supply chain security. Wood Mackenzie sees continued appetite for asset acquisitions if oil prices remain elevated.
What's Next
Wood Mackenzie expects pressure to build on energy companies to deploy excess cash if oil prices remain elevated through the second half of 2026. It remains unclear whether boards will maintain financial discipline or shift toward higher shareholder returns and increased investment.
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Wood Mackenzie projects $495 billion windfall for upstream sector in 2026 at $90 oil
