Oil price shock: ConocoPhillips CEO issues price warning – ‘Supply crunch coming!’

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ConocoPhillips’ chief executive Ryan Lance claimed supply shortages and price volatility remained a threat to the market. During a speech on Tuesday, Mr Lance also warned limited capacity among OPEC countries and slow American output gains lie ahead.

Lance unveiled his analysis during the Houston Producers Forum.

His comments came just days after 46th US President Joe Biden was unable to secure an agreement for the OPEC group to boost production in oil following a visit to Saudi Arabia.

According to the Guardian, Brent crude rose by 2.6 percent to $103.88 (£86.91) on Monday.

The rise came after Saudi Arabia’s foreign minister, Prince Faisal bin Farhan Al Saud, quelled speculation over an output increase.

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However, Mr Lance said: “Ultimately, demand will go back to pre-pandemic levels.”

He added: “There is a supply crunch coming.”

Mr Lance also revealed US output was expanding more slowly than hoped.

He said: “The US will grow shy of a million barrels a day this year … and we’ll probably grow close to another million barrels next year. But we start to kind of plateau.”

However, American production soared by 4million barrels per day in the three years ended December 2019,

In a final warning, Mr Lance explained how the volatility had heightened concerns about a recession.

He said: “If you are going to be in the business, be prepared for a lot of volatility.”

Lance added: “It’s going to go up and it’s going to go down, but not necessarily in that order.”

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Concerns over supply have also led one energy research group to slam proposals to cap Russian oil prices.

Gal Luft from the Institute for the Analysis of Global Security told CNBC: “It ignores the fact that oil is a fungible commodity.”

He added: “You cannot trick the laws of supply and demand, and you cannot defy the laws of gravity when it comes to a fungible commodity.”

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