As the latest earnings season unfolds, a stark transatlantic divergence in capital allocation is coming into focus. While U.S. supermajors ExxonMobil and Chevron reaffirmed their commitment to maintain current share buyback paces through 2026, their European counterparts are preparing to slash repurchases, becoming the first to buckle under sustained lower oil prices.
Analysts surveyed by the Financial Times estimate that European majors, including BP, Shell, TotalEnergies, Equinor, and Eni, could reduce their buyback programs by 10% to 25% this quarter. This comes as Brent crude has languished in the $60s per barrel for months, undermining the financial assumptions behind buyback plans set when prices were between $80 and $100.
The divide underscores a fundamental strategic schism. American firms, leveraged on high-margin assets in the Permian Basin, Guyana, and Kazakhstan, never wavered from core oil and gas growth even during the industry’s peak pivot to renewables in 2020-2021. European majors, having recently recalibrated strategies back toward hydrocarbons while cutting renewable investments, now find themselves with less flexibility. Share buybacks, a key tool used in recent years to narrow the valuation gap with U.S. rivals, are now on the chopping block.
Warnings have been flashing. TotalEnergies signaled an adjustment as early as September 2025, linking future buybacks directly to hydrocarbon prices and margins. It reduced Q4 2025 buybacks to $1.5 billion from $2 billion and set a 2026 quarterly guidance range of $0.75 billion to $1.5 billion, contingent on a $60-$70 Brent price. Shell is expected to trim quarterly buybacks to $3 billion from $3.5 billion, though it aims to stay within its pledge to return 40-50% of cash flow to shareholders. BP faces substantial Q4 impairments—up to $5 billion—mainly linked to its energy transition businesses. In a stark forecast, HSBC expects Equinor’s annual buybacks to plummet to $2 billion in 2026 from $5 billion in 2025.
Analysts see cuts as an inevitable, if painful, adjustment. Barclays predicts an average 25% reduction in European oil buybacks, while UBS forecasts a 21% cut to sector payouts. “Overall, that is seen as a much better option than paying them out of debt,” Barclays’ Lydia Rainforth told the FT.
The pressure points extend beyond immediate shareholder returns. Tom Ellacott and Greig Aitken, corporate research directors at Wood Mackenzie, note that buybacks will be the “first casualty” as companies face a tougher balancing act in 2026. “Lower oil prices will force more structural cost reductions and cuts to buybacks. But the pressure will intensify to lay stronger foundations for next decade,” they stated.
With the perceived immediacy of peak oil demand receding, the industry’s capital is shifting upstream to secure resource growth for the coming decade. This strategic repositioning demands tough choices. “The bottom line is that oil and gas companies can’t do it all in 2026,” WoodMac’s analysts concluded. “They must make critical capital allocation choices that will shape their competitive positioning for the next decade.”
For now, European majors are at the forefront of making those choices, with shareholder returns being the immediate lever pulled in response to a lower-price reality.
