February 10, 2026 [Oil Price]- British Oil and Gas giant Shell Plc. (NYSE:SHEL) needs an exploration breakthrough or a big merger after its oil reserves fell to the lowest levels since 2013, exposing the company to a production shortfall in less than a decade.

Shell’s so-called ‘reserve life’–denoting how long its proven reserves can sustain production at current levels– has dropped to less than 8 years, significantly lower compared with Exxon (NYSE:XOM) and TotalEnergies (NYSE:TTE), each with reserve lives exceeding 12 years. Shell is now facing a production shortfall of 350,000-800,000 barrels of oil equivalent per day by 2035 as its aging fields can no longer maintain output at current levels.

That said, Shell is hardly alone. Chronic underinvestment in upstream oil exploration and development, driven by energy transition goals and capital discipline, has increasingly put future supply at risk and increased the potential for shortages despite short-term market balancing.

OPEC estimates that nearly $18 trillion in upstream investment is required by 2050 to meet long-term demand, a target that is currently undershot with ~90% of investment currently focused on sustaining output rather than expansion. While short-term risks include oversupply, the long-term outlook (post-2030) faces potential shortages as demand persists and investment remains insufficient. Further, accelerating output declines from mature, conventional, and unconventional (shale) fields means failure to invest in new, long-cycle projects could significantly reduce global oil supply.

Pressure from climate change concerns, ESG (Environmental, Social, and Governance) initiatives, and expectations of a rapid energy transition constrained capital for new fossil fuel projects in the early years of the 2020s are also to blame for the current state of affairs. Under investor pressure, Shell set a target to become a net-zero emissions energy business by 2050. This, along with legal rulings in the Netherlands, pushed the company to limit investment in new oil exploration. The company shifted its portfolio to focus on lower-carbon energy, such as Liquefied Natural Gas (LNG) and renewables, reducing the overall weight of traditional crude oil reserves.

Unfortunately for Shell and its peers, large oil finds are becoming fewer, with global discoveries falling to their lowest levels in decades, despite technological advances in drilling and higher commercial success rates. The volume of new conventional oil discovered annually has dropped significantly, from over 20 billion barrels of oil equivalent (boe) in the early 2010s to just over 8 billion boe per year since 2020.