Just a few weeks ago, dealmakers in the oil and gas sector were preparing for another year of moderate activity after a steady but unspectacular 2025. Oil and gas M&A EMEA showed year-on-year gains last year, but deal value remained well shy of the peak levels recorded in 2021, according to figures from Dealogic and White & Case.

A relatively low oil price, which traded are US$60 per barrel for much of 2025, coupled slowing demand in some large global economies, checked deal activity. With oil prices flatlining, vendors were unwilling to transact at discounts and buyers demurred from locking in deals at higher valuations. When deals did progress consolidation and synergies, rather than growth, were the primary deal rationales.

The recent air strikes on Iran, however, have changed the game. The escalating conflict has forced operators in the Gulf to wind production and led to a blockade of the Strait of Hormuz, a strategically crucial waterway that is used to ship around a fifth of the world’s oil and natural gas output. The disruption to supply has seen oil prices almost double since the start of the year.

Price spike changes the game

An elevated oil price has boosted oil and gas company valuations. The Stoxx Europe 600 Oil & Gas index, for example, is showing gains of around 25% for the first quarter of 2026.

The big question now is whether oil prices that are cresting US$100 per barrel, and rising oil and gas company valuations, will bridge pricing gaps between buy-side and sell-side dealmakers in M&A scenarios.

Rising revenues from higher oil prices are set to boost balance sheets and provide oil and gas companies with the capital to acquire smaller rivals (who will be more open to selling at higher valuations) and build scale. Indeed, ION Analytics reports that big ticket mega-deals involving Europe’s oil majors could be back on the cards if higher oil prices persist.

Oil and gas companies, however, have long-term investment horizons. Oil prices remain highly volatile and even the most opportunistic of M&A dealmakers will be cautious about transacting when prices are in such a state of flux.

Complexities and uncertainty

Rising oil prices will also benefit some oil and gas companies more than others, according to where their operations and production are located, and dealmakers will have to have total conviction that they have parsed through these complexities before proceeding with any kind of deal process.

US-based oil and gas companies with US focused portfolios, for example, are not exposed to the logistics and shipping risks that have hit National Oil companies based in the Gulf states, and are in line for a windfall of up to US$63.4 billion if oil prices hold at north of US$100 million per barrel, according to figures from energy research company Rystad reported by the FT.

Oil majors, in both the US and Europe, however, will have large exposures to Gulf assets that have been subject to closure and curtailed production, which could hit profitability in the long-term if the conflict is prolonged and Strait of Hormuz remains shut.

At the start of 2025, most oil and gas dealmakers would have said that oil prices in the US$100 per barrel range would catalyze M&A in the sector. Making that calculation now, however, looks far less certain against the current highly volatile and uncertain backdrop.

What should dealmakers do now?

For oil and gas dealmakers, the message is not to rush but to be ready. Elevated prices may reopen conversations that stalled in 2025, but volatility and geopolitical risk demand discipline. Scenario-driven valuation, flexible deal structures (earn‑outs, contingent consideration), and a sharp focus on asset-level exposure will be essential. The next phase of M&A is likely to favor those with capital, conviction, and the patience to transact when clarity, not just price momentum, returns.

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