Norway Bets Big as US Reserves Thin

Norwegian oil and gas companies now expect 2026 capital expenditure to reach NOK 266 billion ($28.64 billion), up from NOK 255 billion projected in February . That's a bet on the long game. Meanwhile, U.S. crude oil inventories fell 3.3 million barrels in the week ending May 22, bringing commercial stockpiles to 441.7 million barrels—2% below the five-year average , according to the EIA. The contrast is sharp: one side of the Atlantic is drilling for decades ahead, the other is drawing down reserves at a pace that would have been unthinkable five years ago.

The Norwegian spending surge is driven largely by a NOK 20 billion ConocoPhillips-led project to restart production at three previously closed North Sea fields—Albuskjell, Vest Ekofisk, and Tommeliten Gamma—with targeted resources of 90–120 million barrels of oil equivalent and peak production of 36,000 gross barrels per day . First production is planned for the fourth quarter of 2028 . These fields were shut down in 2019. Now they're coming back online, a reversal that signals how much Europe's energy calculus has changed since the Iran war closed the Strait of Hormuz and sent prices into triple digits earlier this year.

Can Long-Cycle Projects Compete With Short-Cycle Shale?

Despite the optimistic revisions, Norwegian capex is still expected to trend downward because many major projects sanctioned under Norway's 2022 temporary tax incentives are nearing completion, and a significant portion of the rising investment numbers stems from cost increases rather than a larger pipeline of new projects , OilPrice.com reported. That's the rub. Norway is spending more to get the same—or less—output. Norway remains central to European energy security, producing more than 4 million barrels of oil equivalent per day, balanced evenly between crude oil and natural gas .

The Greater Ekofisk restart is a $2.16 billion wager that long-duration offshore barrels still matter in a world where U.S. shale can turn on production in months, not years. But shale's flexibility comes at a cost: depletion. U.S. producers have been running hard since the Iran conflict began in late February, and the inventory data shows it. At 441.7 million barrels, U.S. crude oil inventories are about 2% below the five-year average for this time of year, while total motor gasoline inventories decreased by 2.6 million barrels and are 6% below the five-year average .

Across the North Sea, BP is making its own long-term bet. The energy major will become the operator of a large offshore natural gas production project in Azerbaijan—the Babek gas field—with an announcement expected on June 1, according to three industry sources who spoke to Reuters . The field is estimated to hold around 400 billion cubic metres of gas and 80 million tonnes of condensate . That's enough gas to supply Italy for more than a decade at current consumption rates. BP already has significant exposure to oil and gas production in the South Caucasus country, whose energy reserves became more significant for Europe after it decided to cut its dependence on Russia .

What Did TotalEnergies See That Others Missed?

Then there's TotalEnergies, which turned geopolitical intelligence into a billion-dollar payday. The French oil major's traders noticed the U.S. Navy massing ships around the Persian Gulf in February and decided to take a position counter to the market, which was trending down at the time, CEO Patrick Pouyanne told French newspaper Le Figaro . The Iran war broke out on February 28 when the United States and Israel launched large airstrikes on Iran .

Total was the sole buyer in March of Middle East crude as the Iran conflict drastically cut supply, snapping up around 70 Oman and Murban cargoes, or about 35 million barrels, which helped send the benchmark Dubai price to a record high of nearly $170 per barrel , Reuters reported. TotalEnergies reported a 29% jump in first-quarter net income, driven by March trading around oil price spikes due to the closure of the Strait of Hormuz . It was a high-stakes bet that could have backfired spectacularly. "It could have turned out badly, because had the Strait of Hormuz been shut immediately we would have been physically prevented from filling up our cargoes in the region," Pouyanne told Le Figaro .

Natural gas markets are sending their own signals. The EIA reported that utilities added 92 billion cubic feet of gas to storage in the week ended May 22, below forecasts for a 95 to 96 bcf increase and lower than the 104 bcf injection recorded a year earlier , according to market data. Henry Hub natural gas traded at $3.25/MMBtu on Wednesday, down 2.4% on the day. The injection was light enough to prop up futures, but the broader trend is clear: storage is building faster than usual, even as LNG export demand remains elevated. Following the latest report, lower 48 inventories stand 6.5 percent above the five-year average and 2.3 percent above year-ago levels , the American Gas Association noted.

What Changed This Week

Norway raised its 2026 oil and gas investment forecast by $1 billion in three months, driven by ConocoPhillips' North Sea field restart and rising development costs. U.S. crude inventories fell for the fourth consecutive week, dropping to 2% below the five-year average—the tightest since the Iran war began. BP moved to take over Azerbaijan's 400-billion-cubic-metre Babek gas field, cementing Europe's pivot away from Russian supply. TotalEnergies disclosed that its traders spotted U.S. Navy movements in February and bought 35 million barrels of Middle East crude before the war sent prices to $170.

What to Watch

BP and Azerbaijan's SOCAR are expected to announce the Babek field agreement on June 1. The EIA will release its next weekly petroleum status report on May 28 at 12:00 p.m. ET—watch for whether crude draws continue or if refinery runs finally start rebuilding inventories. ConocoPhillips' Greater Ekofisk project timeline will be critical: first production is slated for Q4 2028, but cost overruns on large offshore projects have become the norm, not the exception. And keep an eye on natural gas storage injections through June—if they stay below the five-year average despite mild weather, it signals LNG export demand is tighter than the market thinks.