Shell Seeks Bolt On Acquisitions Amid Expectations Of Lower Oil Prices In 2026

Shell’s chief executive, Wael Sawan, has announced that the company is preparing to capitalise on an anticipated period of depressed crude oil prices by pursuing selective bolt-on acquisitions. Speaking to The Times, Sawan highlighted a credible scenario of global crude oversupply in 2026, with analysts predicting prices falling below $60 a barrel for the first sustained period since 2020.

Sawan reinforced that Shell—Europe’s most valuable oil and gas entity—remains open to strategic opportunities during this downward phase of the commodities cycle. He noted, “Our bar for any M&A is high, but we continue to look at prospects that could create counter cyclical value.” The focus will be on areas such as deepwater oil and gas, liquefied natural gas, and energy marketing.

Despite persistent speculation over a potential mega-merger with BP, Sawan was quick to quell any assumptions that Shell would make a play for its £70 billion rival, pointing out the complexities and risks of large-scale transactions. “I am a sceptic about large-scale M&A. It is difficult to create material value from such moves,” he stated, while underscoring the greater value to be found at low points of the industry cycle.

Shell’s recent results reveal that third-quarter profits fell by less than the market anticipated, thanks to improved trading performance. Adjusted earnings dropped 10 percent to $5.4 billion, outperforming forecasts. The company has also committed to a $3.5 billion share buyback, marking its sixteenth consecutive quarterly repurchase—a testament to Shell’s belief in its own undervaluation. Nevertheless, Sawan noted that the volume of buybacks may fluctuate in line with price movements, while the commitment to distributing 40 to 50 percent of operational cash flow to shareholders remains “sacrosanct.”

The company’s overall production stood at 2.8 million barrels of oil equivalent per day, largely unchanged from the previous year. Shell has taken measures in recent years to streamline costs and strengthen its balance sheet, reducing net debt from $43.2 billion in June to $41.2 billion by September’s close.

The UK government’s “energy profits levy,” a windfall tax originally brought in post-Ukraine invasion, continues to loom over the sector. Industry voices are urging the Treasury to remove the levy, which has been linked to job losses and is considered an impediment to investment. Shell is in the midst of transitioning its UK North Sea operations into a joint venture with Equinor, named Adura. Sawan advocates for a more consistent and growth-oriented tax landscape, arguing it will encourage further capital investment in UK energy assets.