Shell Redirects Capital from Buybacks to New Drilling Following Demand Forecast Reversal
After the IEA dropped its forecast of peak oil demand before 2030, Shell and other supermajors are redirecting capital from dividends and buybacks into reserve replacement and new drilling. RBC expects investors to favor growth projects over distributions as oil demand growth continues through the 2030s.
1. Strategy Pivot to Growth
After years of prioritizing buybacks and dividend distributions, Shell is shifting focus back to reserve replacement with plans to boost spending on exploration and new drilling fields to sustain long-term production capacity.
2. IEA Demand Forecast Reversal
The IEA withdrew its prediction that crude oil demand would peak before 2030, citing slower EV adoption outside China and persistent reliance on oil and gas for power and transport, prompting supermajors to rethink growth strategies.
3. Investor Sentiment and Guidance
RBC Capital analysts expect shareholders will prioritize growth investments over cash returns, forecasting that Shell will increase exploration budgets in 2026 and beyond to replace reserves and support future output.