When the pandemic hit in full force in 2020 and millions of people stopped driving their cars as lockdowns set in and people were sent home to work remotely, the price of crude oil plummeted to historic lows.

The outlook seemed irreversibly dismal — but what a difference a year makes. In 2021, oil prices rebounded far beyond what even the most optimistic forecasts predicted. They jumped by 75% year over year. By the end of 2021, oil was trading at $75 a barrel.

The other positive development was the extraordinary capital discipline exhibited by O&G (oil and gas) companies. Capital expenditures increased by just 17% while oil prices were rising swiftly.

Experts say these two factors helped revitalize the O&G mergers and acquisitions playbook. That is, aggressive and/or cyclical acquisitions have made way for a more restrained approach that has been characterized by strategic thinking with more emphasis on environmental factors.

By the second half of 2021, M&A had rebounded significantly. That was after witnessing the lowest level of activity in a decade. By the end of 2021, M&A deal values in the oil industry rose by 18% for a value of $269 billion.

As we near the end of March 2022, crude oil is riding near the $120/barrel mark.

While the end of the pandemic is a major factor, the massive disruption in the flow of oil internationally caused by the outbreak of war between Russia and Ukraine has thrown a whole new set of variables into the market mix.

It’s likely that the price of crude oil will rise further, especially if the war wears on and a high amount of uncertainty remains among investors. At the same time, oil prices have already showed strong signs of stabilizing.

Just one major area to watch for the remainder of 2022 is ESG deal making. As it stands, ESG investments total $1.7 trillion and account for 10% of the worldwide fund assets across the global industry.

Even so, just 10% of O&G deals were predicated on ESG factors and/or communicated a ESG rationale for the consideration of stakeholders.