With the recent volatility in the price of oil, what do analysts expect for earnings growth for the Energy sector for Q3?
Overall, the Energy sector is currently expected to report the highest (year-over-year) earnings growth rate of all eleven sectors at 121.1%. This growth rate is significantly above expectations for earnings growth of 79.3% on June 30, as the Energy sector has recorded the largest percentage increase in estimated (dollar-level) earnings of all eleven sectors since the start of the quarter at +23.3% (to $58.0 billion from $47.0 billion). Higher oil prices are contributing to the higher earnings for the sector. From June 30 to September 30, the price of oil (WTI) increased by 30% (to $90.42 from $69.50). Overall, the average price of oil (WTI) in Q3 2026 ($85.68) was 32% above the average price for oil in Q3 2025 ($64.97).
At the sub-industry level, 4 of the 5 sub-industries are projected to report year-over-year growth in earnings: Oil & Gas Refining & Marketing (462%), Integrated Oil & Gas (113%), Oil & Gas Exploration & Production (60%), and Oil & Gas Storage & Transportation (8%). On the other hand, the Oil & Gas Equipment & Services (-9%) sub-industry is the only sub-industry in the sector predicted to report a year-over-year decline in earnings.
Looking ahead, analysts are predicting lower (year-over-year) earnings growth rates for the Energy sector over the next 4 quarters. For Q4 2026 and Q1 2027, the estimated earnings growth rates for the sector are 117.1% and 86.7%. For Q2 2027 and Q3 2027, analysts project year-over-year declines in earnings of -21.3% and -19.5%.
FactSet Energy analyst Jesse Mercer (Director, FactSet Oil & Gas) provided commentary on key trends to watch in the Energy sector during this earnings season:
North American energy earnings for Q3 2026 will likely arrive with U.S. refiners as the standout performers, benefiting from secure access to crude supplies amid a strong refined product pricing environment. Diesel cracks broke record highs over the past quarter, incentivizing refiners to shift yields toward middle distillates. This resulted in a drawdown of gasoline inventories, which has supported prices well beyond the peak summer driving season. Key to watch will be commentary on the durability of middle distillate supply tightness and upcoming refinery maintenance plans.
For upstream operators, capital discipline remains the dominant theme despite elevated oil prices over the past quarter. Most publicly traded upstream operators have so far prioritized debt reduction and shareholder returns over aggressive production growth. Rather than expanding drilling programs, producers have largely deployed free cash flow into bolt-on acquisitions to augment existing acreage positions or to unlock secondary bench opportunities.
Looking forward, rising cost pressures from diesel, chemicals, and new tariffs on imported steel may compel E&Ps to scrutinize expansion plans. For Permian-focused operators, these headwinds will likely be offset by strengthening in-basin natural gas prices due to alleviated pipeline constraints. In general, across the E&P sector we expect management teams to reaffirm conservative spending guidance alongside production gains driven by operational efficiency rather than significant increases in rig counts.
Given expectations for a warm winter and a tepid near-term outlook for natural gas prices, gas-weighted E&Ps may begin signaling a shift toward their wet gas inventory, hi-grading acreage to capitalize on the growing uplift from natural gas liquids. On the midstream front, the sector enters the coming earnings season with considerable momentum. Key themes to watch include the pace of data center and power generation contract announcements, progress on LNG export infrastructure, the continued buildout of LPG export capacity, and updates on long-haul Permian gas egress.
View more detailed analysis from Jesse Mercer.
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