It was a tumultuous year for oil markets. But as 2018 draws to a close, researchers at Rystad Energy believe global spending in the oil and gas sector will rise in 2019.

The Norwegian consultancy is forecasting an increase of 3%, which amounts to roughly $16 billion more than the investment total for 2018.

“Tight oil and deepwater will see the strongest growth, with an increase of 8% next year,” said Espen Erlingsen, partner and head of upstream research at Rystad.

“In terms of the geographical split, 2019 exploration and production (E&P) investments are expected to grow the most in South America, North America, the Middle East and Africa.”

Espen’s commentary echoes key findings from the latest edition of the Upstream Trends Report, Rystad’s flagship publication.

The report, which represents the firm’s latest take on the oil market, contains updates that follow the decision by OPEC and its allies to slash crude production by 1.2 million barrels per day (bpd).

Going forward, Rystad is confident that E&P companies are better equipped to live with lower oil prices than they were when the previous price shock hit the market in 2014. If prices fell to $40 per barrel in today’s market, the firm says there’s strong chance that both major global oil companies—and those that focus on tight oil production—could generate positive free cash flow.

Meanwhile, in an $80 per barrel scenario, Rystad believes global investments would increase by roughly 10% on average in 2019 and 2020. At $60 per barrel, it would expect to see a decline of around 2%.

“Investments in the offshore sector are more robust,” Erlingsen adds. “Even with an oil price of $50 per barrel, investments are expected to increase for midwater and deepwater E&P activities. US tight oil is still very sensitive to oil prices and a WTI oil price below $50 will reduce growth.”

Full forecasts are included in the latest edition of Rystad’s Upstream Trends Report, which explores the following topics at length:

  • Trends in upstream investments and costs
  • Major projects to be sanctioned
  • Key drivers of spending