ConocoPhillips Sees $70 as New Oil Price Floor

ConocoPhillips Chairman Ryan Lance has declared that the floor for oil prices is now around $70 per barrel, a significant shift from earlier forecasts. Before the Iran war, projections for 2025 were far lower, with the U.S. Energy Information Administration (EIA) expecting Brent crude to drop to $50 by early 2026. However, Lance believes oil prices may not fall that low for years, if ever.

Speaking at a forum in London, Lance emphasized that rebuilding the global oil supply will take years, possibly until 2028 or 2029. He also highlighted that ConocoPhillips is focusing more on upstream exploration, finding and producing oil, rather than midstream investments, which involve transporting and storing oil. The conflict in Iran has strained global oil inventories, with about 3 billion barrels lost, roughly half of what normally flows through the Strait of Hormuz.

Higher oil prices have boosted profits for major oil companies, with ConocoPhillips reporting a 128% year-over-year increase in adjusted earnings per share for the second quarter. ExxonMobil also saw a similar rise in earnings. These companies are generating more free cash flow, allowing them to pay down debt, strengthen balance sheets, and return capital to shareholders, making their stocks more attractive.

While higher oil prices are favorable for oil stocks, investors should monitor geopolitical shifts that could impact oil prices in the long term. The U.S. may prioritize domestically produced renewable energy and new oil routes due to national security concerns, potentially leading to lower oil prices in the future.