US oil & gas dealmakers entered 2026 expecting increased deal activity driven primarily by defensive consolidation and AI adoption. Their predictions appeared to be justified until the Iran war began at the end of February and, with the swift, resultant closure of the Strait of Hormuz to almost all traffic, took an almost immediate toll on global oil markets.
With oil prices spiking by almost 70 percent this calendar year and the price of Brent crude frequently exceeding US$100 a barrel in March, many prior forecasts for oil & gas dealmaking have been put on hold. This is due to the simple fact that supply chain disruption and oil price volatility typically take transaction activity off the table.
In an unexpected twist, however, it appears that current market conditions could actually provide an impetus for US oil & gas M&A, particularly for the major players.
Shifting deal dynamics
One of the biggest roadblocks to dealmaking in the industry in 2025 was the low oil price, which hovered around US$65 dollars per barrel for much of the year. Buyers were hesitant to pay full valuations for assets and sellers reluctant to deal at discounted valuations at a flat point in the pricing cycle.
That dynamic has shifted since the start of the conflict in the Middle East. Higher oil prices are already translating into higher oil company valuations, with the Dow Jones US Oil & Gas Total Stock Market Index showing gains of around 30 percent for the year to date.
The US is the world’s largest oil & gas exporter but is geographically remote from the logistical disruption that has impacted production in the Middle East, leaving US-based operators in a position to benefit from the rising oil price without the direct downside risk. Forecasts from investment bank Jefferies show US oil & gas groups have seen monthly cashflows rise by around US$5 billion as oil prices have climbed.
According to Mergermarket, cash windfalls could present acquirers with the balance sheet strength and the confidence to pursue growth deals.
Together, these factors could put US oil & gas M&A back in the frame. However, the time frame around such activity remains almost impossible to judge as asset prices continue to change rapidly.
Consolidation is key
Today’s deal backdrop could not be more different from that of 2025. Hopes that the One Big Beautiful Bill Act, which unlocked significant benefits for the oil & gas industry, including the reinstatement of tax deductions for drilling and mandating the sale of oil and gas leases in federal land and offshore areas, would lead to a deal bonanza never quite materialized.
The sector did see some large, headline transactions in 2025, but M&A was less about growth and more about consolidation and strategic repositioning, with deal rationales centering on building scale to increase exports and unlock operational synergies in a lower-price environment.
At the end of 2025, for example, SM Energy and Civitas Resources announced a US$12.8 billion all-stock deal to form one of the ten largest independent oil producers in the US. The business will focus on natural gas shale deposits in the Permian Basin.
Other deal highlights in the US natural gas space in 2025 included EOG Resources’ US$5.6 billion acquisition of Encino Acquisition Partners to strengthen its position in the Utica shale basin in Ohio, and Viper Energy landing a US$4.1 billion all-stock deal to acquire Permian-focused oil and gas player Sitio Royalties.
More consolidation is anticipated across the US market as smaller operators look for opportunities to build scale and take advantage of rising US exports of liquefied natural gas (LNG), as well as unlock operational synergies.
PE prospecting
Private equity dealmaking has been another major driver of activity in the sector. Bucking the trend observed in the wider market, PE buyout and secondary buyout deal value in 2025 almost tripled year on year, climbing from US$6.5 billion in 2024 to US$17.2 billion.
Annual buyout deal value for the year was somewhat skewed by Brookfield Infrastructure Partners’ US$9 billion acquisition of Colonial Enterprises, the operator of the largest fuel pipeline in the US, but the market has provided private capital firms with investment opportunities in other segments of the industry too.
US investment firm Sixth Street, for example, secured a US$1.5 billion deal to acquire a portfolio of non-controlling stakes in various US shale assets from BP, which is undertaking a US$20 billion divestment program.
PE players are also partnering with international investors in the US LNG sector. Infrastructure-focused firm Stonepeak, for example, allied with Australia’s largest energy company, Woodside Energy, to provide a US$5.7 billion financing package for an LNG development in Louisiana.
Securing supply and harnessing AI
The key question now is whether the short-term oil price and company valuation uplift fueled by the Iran conflict will translate into expanded deal flow. Establishing valuations amid a security crisis is extremely challenging and predicting how oil supply chains and global demand will reconfigure post-conflict is virtually impossible.
Strategically, however, international businesses in the Asia-Pacific region, where there have been supply shortages due to the Strait of Hormuz closure, may accelerate plans to build exposure to US supply.
Overseas dealmakers had already started to increase deployment in US energy assets last year, following pledges from their governments to increase US investment as part of trade talks.
And more international strategic investors are expected to turn to the US shale and LNG industry. Early in 2026, for example, Japan’s Mitsubishi Corporation announced a US$7.5 billion deal to acquire the US’ largest privately owned shale gas producer, Aethon. Similar inbound deals may well follow, as countries move to diversify oil supplies.
There may also be increased urgency to invest in technologies that improve extraction, particularly if supply chain constraints in the Gulf persist.
Digitalization and AI adoption will be at the center of the drive to optimize financial and operational execution. Oil & gas majors are focusing on implementing AI-powered workflows to maximize efficiency across their portfolios. AI is also being deployed to support predictive maintenance and speed up research in new energy technologies.
Meanwhile, advances in drilling techniques are allowing operators in rich basins such as the Permian to improve extraction methods, with automated and semi-automated drilling technology enabling operators to drill longer laterals (horizontal sections drilled off primary, vertical wellbores) and increase yields.
Outlook
The situation in the Middle East remains entirely fluid, and oil prices are extremely volatile. Predicting what comes next is impossible, but despite the conflict and the considerable challenges it poses—including how it will unfold—opportunities are likely to present themselves to the US oil & gas sector. M&A will be central to how the industry navigates the uncertainty created by these events.
With higher oil prices producing robust balance sheets, rising international interest in securing stable energy supplies, and a wave of digital transformation led by AI, US dealmakers could find themselves well positioned to move ahead with transactions that will shape the next chapter of global energy. Given the current state of affairs, however, it could take some time for the holding pattern to break.