Global Oil Exploration Investments Decline, a First Since 2020

Oil companies may reduce their exploration and production budgets in 2025, driven by geopolitical tensions and financial caution, according to a new report by U.S. banking group JP Morgan.

Share:

Comprehensive energy news coverage, updated nonstop

Annual subscription

8.25$/month*

*billed annually at 99$/year for the first year then 149,00$/year ​

Unlimited access • Archives included • Professional invoice

OTHER ACCESS OPTIONS

Monthly subscription

Unlimited access • Archives included

5.2$/month*
then 14.90$ per month thereafter

FREE ACCOUNT

3 articles offered per month

FREE

*Prices are excluding VAT, which may vary depending on your location or professional status

Since 2021: 35,000 articles • 150+ analyses per week

Global investments dedicated to oil exploration and production could decline this year, marking the first reduction observed since 2020. This decrease is mainly explained by an unstable international environment and heightened caution among oil companies facing economic volatility. According to recent forecasts published by JP Morgan, the industry’s overall expenditures could fall by 1.1%, down to $543 billion from nearly $549 billion last year. This slowdown comes as companies aim to maintain financial stability amid unpredictable fluctuations in oil prices.

U.S. Producers Opt for Caution
In the United States, oil sector companies, especially those specialized in shale oil, anticipate a reduction in capital expenditures of about 1.9%. Despite this cautious budgeting, they have intensified their financial hedging strategies during recent spikes in oil prices. Approximately 250 million barrels, representing a significant share of planned production from late 2025 to early 2027, have been secured through these hedging contracts. According to JP Morgan, these hedges could nevertheless support moderate growth in U.S. crude and condensate production, estimated at 253,000 barrels per day in 2025.

U.S. Policies and Sectoral Uncertainty
Investment choices in the United States remain strongly influenced by the national political environment. A recent quarterly survey by the Dallas Federal Reserve Bank revealed that executives of oil companies show increasing concern about regulatory uncertainties in the U.S. Indeed, the overall activity indicator for the energy sector, as calculated by the same survey, now shows a negative value of -8.1, compared to 3.8 in the previous quarter. Companies’ outlook remains pessimistic, with a future activity index at -6.4, reflecting persistent uncertainty.

Significant Declines in Asia and Latin America
Internationally, the Asia-Pacific region could see the most significant budget cuts, with an estimated reduction of nearly 5%. In China, two major national companies, PetroChina and Sinopec, have officially announced cuts to their exploration and production investments for 2025. Latin America is experiencing a similar trend: in Mexico, the national oil company Petróleos Mexicanos (Pemex) faces a severe debt crisis. In Colombia, the state-owned Ecopetrol has also announced substantial reductions in operating costs.

Production Expected to Increase Despite Budget Cuts
Despite the announced reductions, JP Morgan anticipates an increase in global oil production of 2.3 million barrels per day in 2025. This forecast is mainly due to gains in operational efficiency and significant reductions in production costs recorded in recent years. This development reflects a new investment dynamic where productivity becomes more critical than the volume of capital committed, prompting strategic reflection on the long-term balance between financial caution and operational performance.

Nigerian tycoon Aliko Dangote plans to expand his refinery’s capacity to 1.4 million barrels per day, reshaping regional energy dynamics through an unmatched private-sector project in Africa.
COOEC has signed a $4bn EPC contract with QatarEnergy to develop the offshore Bul Hanine oil field, marking the largest order ever secured by a Chinese company in the Gulf.
The group terminates commitments for the Odin and Hild rigs in Mexico, initially scheduled through November 2025 and March 2026, due to sanctions affecting an involved counterparty, while reaffirming compliance with applicable international frameworks.
Shell has filed an appeal against the cancellation of its environmental authorisation for Block 5/6/7 off the South African coast, aiming to continue exploration in a geologically strategic offshore zone.
The Greek government has selected a consortium led by Chevron to explore hydrocarbons in four maritime zones in the Ionian Sea and south of Crete, with geophysical surveys scheduled to begin in 2026.
Algerian company Sonatrach has resumed exploration activities in Libya's Ghadames Basin, halted since 2014, as part of a strategic revival of the country's oil sector.
The Indian refiner segments campaigns, strengthens documentary traceability and adjusts contracts to secure certified shipments to the European Union, while redirecting ineligible volumes to Africa and the Americas based on market conditions.
US authorities have authorised a unit at Talen Energy’s Wagner plant in Maryland to operate beyond regulatory limits until the end of 2025 to strengthen grid reliability.
Gran Tierra Energy has signed a crude oil sale agreement with a $200mn prepayment and amended its Colombian credit facility to improve financial flexibility.
Operations at BP’s 440,000 barrel-per-day Whiting refinery have resumed following a temporary shutdown caused by a power outage and a minor fire incident.
The European Union targets a trading subsidiary and a refinery linked to China National Petroleum Corporation, tightening access to financial and insurance services without disrupting pipeline deliveries, with reallocations expected in settlements, insurance, and logistics. —
Viktor Orban says he is working to bypass recent US sanctions targeting Rosneft and Lukoil, underscoring Hungary’s continued reliance on Russian hydrocarbons.
Traceability requirements from the EU (European Union) on fuel origin are reshaping Indian refined flows, with a shift toward Africa and Brazil supported by local premiums and a decline in Russian exports.
U.S. sanctions targeting Rosneft and Lukoil trigger a rebound in oil, while the European Union prepares a clampdown on liquefied natural gas and maritime logistics, with immediate repercussions for markets and Russia’s export chain.
Ten days before COP30, Brazil awarded five offshore oil blocks for over $19mn, confirming its deepwater development strategy despite environmental criticism.
Tripoli mise sur des partenariats avec des majors et jusqu’à 4 milliards $ d’investissements pour relancer sa production pétrolière, malgré un climat politique divisé.
Niger hardens its stance on energy sovereignty but avoids breaking with China National Petroleum Corporation, its main oil industry partner, in order to safeguard export revenues.
As Brent hovers near $60, growing opacity around OPEC’s output restrains a steeper decline in crude prices amid surplus warnings by the International Energy Agency.
Portuguese energy group Galp plans to finalise a strategic partnership for its offshore oil project Mopane in Namibia before the end of the year.
A traditional leader from the Niger Delta is seeking compensation before Shell’s onshore asset sale, citing decades of unaddressed pollution in his kingdom.

All the latest energy news, all the time

Annual subscription

8.25$/month*

*billed annually at 99$/year for the first year then 149,00$/year ​

Unlimited access - Archives included - Pro invoice

Monthly subscription

Unlimited access • Archives included

5.2$/month*
then 14.90$ per month thereafter

*Prices shown are exclusive of VAT, which may vary according to your location or professional status.

Since 2021: 30,000 articles - +150 analyses/week.