Last year started with a chorus of “What if?” in the oil and gas industry.
What if Donald Trump really does put tariffs on dozens of countries? What if conflict in the Middle East extends to bombing Iran? What if oil prices fall but industry costs keep climbing? What if OPEC+ starts easing its production limits?
The year ended with a chorus of, “Yeah, that happened.”
In 2025, natural gas prices rose and global oil prices fell. Crude production surged, and in multiple countries. Explorers found success around the world. Gaza got an agreement while Ukraine got complicated. Bumerangue returned a winner for BP offshore Brazil. And the question of the year might have been, “What now?”
How the Year Started
Kuwait Oil Company announced in January it had discovered an estimated 800 million barrels of oil and 600 billion cubic feet of associated gas at the Al Jlaiaa/Al Julaiah offshore field in Kuwaiti waters. That kicked off a reasonably good year of exploration results for the industry.
Trump became U.S. president, again, and wasted no time introducing new tariff actions.
On Feb. 1, the White House imposed 25-percent tariffs on most goods from Cananda and Mexico, then suspended them on goods that complied with existing trade agreements. That kicked off several rounds of U.S. tariff announcements, revisions and reversals. Financial experts called the U.S. tariff situation “complex.”
In March, Repsol announced it would combine its North Sea upstream business with NEO Energy Group. The resulting joint venture would have estimated production of about 130,000 barrels of oil equivalent per day. It expanded even further late in 2025 when TotalEnergies revealed plans to merge its British North Sea assets into the mix.
NEO NEXT+, the combined company, was expected to become the largest independent in the UK with production of more than 250,000 boe/d. The moves were part of an ongoing industry-wide trend toward restructuring and merging producing assets. Analysts said the North Sea combination reflected an attempt to deal with an aging basin and a challenging regulatory and tax environment.
China National Offshore Oil Corporation Limited reported an eastern South China Sea discovery in late March, its Huizhou 19-6. A Paleogene light crude find, the well encountered 127 meters of oil and gas pay zones, CNOOC noted. It estimated the field holds more than 100 million tons of oil equivalent in place, more than 700 million boe.
OPEC+ announced an accelerated phase- out of its voluntary oil production cuts, with eight members agreeing to a total increase of 411,000 barrels per day. The cartel followed up in July with a production increase adjustment of 548,000 b/d. OPEC earlier had reported plans for a “gradual and flexible” lifting of its total 2.2 million barrels per day in production curtailments.
Saudi Arabia and Kuwait announced a Neutral Zone oil discovery in the North Wafra Wara-Burgan field in May. The discovery well reportedly flowed at more than 500 barrels per day, with API gravity of 26-27 degrees.
“This marks the first discovery since the resumption of production operations in the Partitioned Zone and its adjacent offshore area in mid-2020. The discovery is regarded as highly significant,” the announcement stated.
Prices, Supply
Brent crude reached its mid-year price low, around $60 a barrel, in early May. Global oil prices then recovered but declined again after July, with Brent once again trading in the $60 to $65-per-barrel range late in the year. West Texas Intermediate crude was priced below $60 a barrel by year-end.
Throughout 2025, average U.S. natural gas prices stayed meaningfully higher than a year earlier. The Henry Hub spot price rose to more than $4 per million Btu in January, falling below $2.90/mmBtu only in the low-demand summer months, according to the U.S. Energy Information Administration. U.S. gas futures hit $5-plus at their high in December.
Volatility marked world LNG prices, which spiked early but then declined to about $11/mmBtu for major overseas benchmarks in the 4th quarter of 2025, while US LNG export prices fluctuated around $7-$8/mmBtu.
Global oil supply saw a significant increase of almost 1 million barrels per day, rising to reach 105.6 million b/d in June. Crude inventories surged and supplies of natural gas liquids and feedstocks were up for the fourth month in a row.
Fitch Ratings service changed its 2025 outlook for the global oil and gas sector in June from “neutral” to “deteriorating.” It cited U.S. tariff announcements, faster than expected easing of OPEC+ production limits and growing non-OPEC production.
On June 22, the U.S. Air Force and Navy conducted a bombing run against three Iranian nuclear facilities – Natanz, Fordow and Isfahan. World oil prices increased but quickly fell back.
Other Major Discoveries
Explorers reported several notable discoveries around the world in July and August:
• Central European Petroleum announced results of its Baltic Sea offshore Wolin East well in Poland, coming in at about 200 million boe – 22 million metric tons of oil and 5 billion cubic meters of natural gas. CEP called it “the largest conventional oil discovery in Poland’s history and one of the largest in Europe.”
• Azule Energy, a BP-Eni partnership, reported that its offshore Gajajeira-01 well drilled in the lower Congo Basin of Angola produced gas and condensate in a Lower Oligocene target. Initial assessments “suggest that gas volumes on site may exceed 1 trillion cubic feet, with up to 100 million barrels of associated condensate,” Azule noted.
• Aker BP completed its Omega Alfa exploration campaign in the Norwegian North Sea with an oil discovery in the Yggdrasil production area. It estimated recoverable volumes at 96 million-134 million boe, increasing total Yggdrasil reserves to 700 million-800 million boe.
• Talos Energy announced successful results from its Daenerys deepwater exploration project on several Walker Ridge blocks in the Gulf of Mexico (America). The discovery well found oil pay in multiple high-quality, subsalt Miocene sands, Talos reported.
• BP labeled its successful well on the offshore Bumerangue block in Brazil’s Santos Basin the company’s largest discovery in 25 years The well penetrated an estimated 500-meter gross hydrocarbon column in a pre-salt carbonate reservoir, BP reported.
Other Highlights and Low Points
Dry Hole of the Year probably went to the Argerich-1 well drilled by Equinor on the CAN-100 block off Argentina, declared a duster in July. The Argentina Norte Basin project, about 300 kilometers offshore, was an attempt to step production south from Brazilian waters.
In September, Oil India’s discovery of natural gas with the Vijayapuram-2 well in the Andaman Basin, near the Andaman Islands, caused considerable excitement and speculation in India’s media. The Andaman-Nicobar basin area and India’s Mahanadi and Bengal basins are all now considered prospective for oil and/or gas.
Iran reported the major natural gas find of the year with an estimated 10 Tcf gas-in-place discovery in the Pazan field in the country’s south. Pazan also could hold more than 200 million barrels of oil, Iran noted. And Kuwait Oil Company claimed another gas and condensate find, this time in the offshore Al Jazah field. KOC estimated potential gas reserves of 1 Tcf or more.
In a global first, for the first half of 2025, renewable energy sources produced more electricity worldwide than natural gas, according to a report issued in October by energy think tank Ember. Renewables generated 34.3 percent of electricity and coal 33.1 percent, it found, as comparatively low cost boosted wind and solar usage.
Wood Mackenzie found that several countries achieved record oil production in 2025, reshaping the world’s supply balance:
• United States: 13.7 million b/d in August
• Canada: 5.11 million b/d in July
• China: 4.6 million b/d in April
• Brazil: 3.96 million b/d in July
• Kazakhstan: 2.17 million b/d in March
“For the first three quarters of this year, the (oil) market was in surplus about 2 million barrels a day. Over this period, we did see global inventories increasing by about 300 million barrels,” observed Toril Bosoni, head of markets for the International Energy Agency.
She attributed the surplus and inventory expansion to record exports from the Middle East and the United States, stock building in Chinese inventories, increases in gas liquids holdings and a surge in crude held in ocean transport.
Mergers and Acquisitions
In a third-quarter survey by the Federal Reserve Bank of Dallas, 36 percent of energy executives reported they had significantly delayed investment decisions in response to uncertainty about the future price of oil and/or the cost of producing oil.
The pace of mergers and acquisitions in the energy industry slowed in 2025, but big deals continued to emerge.
The year started with power producer Constellation announcing it would acquire gas producer Calpine Corp. in a cash and stock transaction valued at approximately $16.4 billion.
Other mergers and acquisitions activity included:
• Diamondback Energy acquired subsidiaries of Double Eagle IV in a deal valued at $4.08 billion, including $3 billion in cash. According to analysts, Diamondback gained core Midland Basin assets with more than 340 net horizontal well locations on 40,000 net acres of largely undeveloped acreage.
• Diversified Energy acquired Maverick Natural Resources, a private equity-owned company, for about $1.3 billion. It got entrée to the Permian Basin with Maverick’s producing oil fields in West Texas and New Mexico.
• SM Energy Company and Civitas Resources announced a merger agreement in a $12.8 billion combination. SM Energy was set to emerge as one of the Top 10 U.S. independents with about 823,000 net acres in the Permian Basin, DJ Basin and other plays.
• In a multi-stage deal, Antero Resources agreed to acquire the upstream assets of HG Energy for $2.8 billion in cash plus assumption of HG’s hedge portfolio. Antero Midstream would purchase HG’s complimentary midstream assets for $1.1 billion, while Antero would divest upstream and midstream Utica Shale assets for $1.2 billion.
• Canadian firm Ovintiv agreed to acquire all the outstanding shares of NuVista Energy in a cash and stock transaction totaling about C$3.80 billion (US $2.77 billion). the deal includes around 140,000 net acres (about 70-percent undeveloped) and 930 well locations in the core of the Alberta Montney shale play.
Midstream activity included a December announcement by Targa Resources that a subsidiary would acquire Stakeholder Midstream LLC for $1.25 billion in cash. Stakeholder provides natural gas gathering, treating and processing services in the Permian Basin.
In LNG and energy infrastructure, Sempra arranged to sell a 45 percent equity interest in Sempra Infrastructure Partners to affiliates of KKR, a leading global investment firm. Transaction proceeds were $10 billion, subject to adjustment.
Subsea contractors Saipem and Subsea 7 agreed to combine into a new entity, Saipem7, in a major energy services merger. Petrobras, ExxonMobil and other entities challenged the plan, citing concerns about its effect on competition in the subsea sector.
Late-Year Developments
In November, Chevron reported that West Texas would be the site for its first natural gas power plant to support AI data center needs. ExxonMobil also planned to equip data centers with natural gas plants, as the energy industry attempted to cash in on the AI-related building boom.
Eni announced a late-year gas discovery with its Konta-1 well in the Kutei Basin, some 50 kilometers off the coast of East Kalimantan in Indonesia. It estimated 600 billion cubic feet of gas in place plus condensate, with total potential of more than 1 Tcf.
In December, Australia opened up five exploration areas in the Otway Basin for permit bidding, two offshore Victoria and three offshore Tasmania. The government hopes to encourage natural gas exploration and development. Bidding closes at the end of June. ConocoPhillips had already started exploratory drilling in the basin.
Energy geopolitics again took prominence as the year drew to a close, when U.S. forces seized control of an oil tanker offshore Venezuela. The Trump administration claimed the tanker was loaded with sanctioned crude. It placed additional sanctions on six other vessels carrying Venezuelan oil. Trump later announced a blockade on all sanctioned tankers entering or leaving Venezuelan waters.
