Oil executives meeting in London say the market disruption from the Iran war will not ease quickly. ConocoPhillips' executive chair now puts the price floor for WTI crude near $70 a barrel, while Saudi Aramco's chief executive says rebuilding global stockpiles could take up to two years.
Executives at the Energy Intelligence Forum in London said on Monday that shipping bottlenecks, refinery cuts, and inventory draws will keep oil prices elevated well beyond this year. The disruption follows the US-Israeli war on Iran, which began at the end of February and closed the Strait of Hormuz to much of its usual traffic.
Oil price floor rising to $70
ConocoPhillips Executive Chair Ryan Lance said the price floor for US benchmark crude oil is rising. He put WTI's floor at around $70 a barrel, with a mid-cycle price of $65 to $70.
Should prices stay strong, he said, US oil production could exceed 14 million to 14.5 million barrels per day. Lance also said global oil demand may not recover from this year's dip until 2028 or 2029.
Brent crude futures traded just above $100 a barrel on Monday. WTI stood close to $90 over the same session.
Strait of Hormuz squeeze drains reserves
Saudi Aramco CEO Amin Nasser said it could take up to two years to refill global stockpiles drawn down as an emergency measure. He said 3 billion barrels have been lost since the conflict began, and 1 billion barrels have been withdrawn from global inventories. Global oil inventories stood at roughly 10 billion barrels heading into the conflict.
In the US, the Strategic Petroleum Reserve fell below 284 million barrels for the week ending Sept. 25, near its lowest level since the reserve began in the early 1980s. The reserve requires 250 to 300 million barrels to function properly.
Kuwait Petroleum CEO Shaikh Nawaf Al-Sabah said the war has left the world short of 6 million barrels per day of refined products. Kuwait's own crude exports have still held near 1 million barrels per day this year.
Higher prices lift producer earnings
The supply crunch has already shown up in results. ConocoPhillips reported second-quarter adjusted earnings per share up 128% year over year. ExxonMobil's adjusted earnings per share more than doubled year over year. Lance said ConocoPhillips is currently focused more on upstream exploration than on midstream investment.
Nasser told the forum that pressure on both crude and refined fuel markets will keep intensifying until Hormuz fully reopens and confidence returns.
Sources: Investing.com, The Motley Fool
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