Global Oil Price Correction: Implications for Oil and Gas Companies

Significant Price Movements in Energy Commodities

The global oil market has experienced a significant correction in 2025, with West Texas Intermediate (WTI) crude oil prices declining by 18.57% year-to-date to US$58.40 per barrel as of December 25, 2025. Similarly, Brent crude oil prices have decreased by 16.58% to US$62.24 per barrel. Despite the yearly decline, both WTI and Brent prices have shown recent strength, rising by 4.29% and 4.09% respectively over the past week.

Contrasting Trend in Natural Gas Prices

In contrast to the declining oil prices, natural gas prices have demonstrated remarkable resilience. The global natural gas price has surged by 16.97% year-to-date to US$4.24 per MMBTU as of December 25, 2025. The price has also shown a significant weekly gain of 8.74%. This divergence in price movements between oil and natural gas is likely to have significant implications for oil and gas companies.

Strategic Implications for Oil and Gas Companies

According to Muhammad Wafi, Head of Research at Korea Investment & Sekuritas Indonesia (KISI), oil and gas companies need to adapt their strategies in response to the current commodity price environment. With oil prices in the range of US$50-60 per barrel, the profitability of upstream oil producers is expected to decline due to margin compression. Therefore, companies in this sector are advised to optimize their gas assets as a key strategy to maintain performance in the coming year.

Outlook for 2026

The contrasting trends in oil and gas prices present both challenges and opportunities for oil and gas companies in 2026. While lower oil prices may negatively impact revenue from oil production, the stronger gas prices could provide a cushion. Companies that successfully rebalance their portfolios towards gas production are likely to be better positioned to navigate the challenges posed by the current oil price environment.