ConocoPhillips CEO sees no quick resolution to oil price crisis

HOUSTON — Minutes before ConocoPhillips CEO Ryan Lance took the stage at CERAWeek Tuesday, the news broke that the U.S. will ban Russian imports of oil.

It occurred as global oil markets soared, with the key commodity price of diesel headed Tuesday toward what would easily be its all-time high price. 

Naturally, the first question posed by CERA leader Dan Yergin was on the impact of the action.

The U.S. oil system will “recalibrate itself quickly,” Lance said. But he offered little assurance that there was any end to the current crisis that by Tuesday had already tacked on another more than 45 cents per gallon to the ultra low sulfur diesel price on the CME commodity exchange.

“We need to start thinking about the medium and long term,” Lance said at the conference, which is now operated by the S&P Global Commodity Insight division of S&P Global. “This thing could be with us for a while.”

Lance said the oil industry is at the “juxtaposition” of three key issues: national security, energy security and environmental security.

“Unfortunately, when you don’t manage energy security well, these are the implications you have,” he said. Energy is “back on the forefront. It never should have left.”


Market volatility is inevitable for the foreseeable future because the oil market is “thinly balanced.” As a result, Lance said, “we’re going to have to live with that kind of volatility in the market.”

The diesel market itself was screaming higher as Lance made his remarks. The price of ultra low sulfur diesel on the CME commodity exchange at approximately 11:20 a.m. EST Tuesday had risen 45.81 cents a gallon, an increase of 11.68%. Its price of $4.3796 would blast through the all-time high settlement price on the contract of $4.11 a gallon set on July 3, 2008. That date had been the high-water mark for many prices in the petroleum complex but was set Tuesday to have been far surpassed by the movement in today’s market.

The ban on Russian imports might be largely moot in that there has been massive self-sanctioning in the oil industry by companies that do not want to be seen conducting commerce with Moscow. A purchase of a Russian cargo by Shell last week brought down a huge wave of criticism on the company, which affirmed its policy later not to deal with the country and said it was donating profits to the ultra-cheap cargo it bought to aid Ukrainian refugees. 

U.S. imports of all petroleum from Russia in 2021 ranged from 453,000 barrels a day to 848,000 barrels a day per month, according to monthly import/export figures, which lag by more than two months. That was far higher than in recent years. 

The more preliminary weekly figures last week showed U.S. imports from Russia had dropped to zero.

Russia is a major supplier of all grades of diesel to the world, which is why the gains in the price of diesel have been greater than those of crude. Spreads between crude and diesel have soared worldwide. On the CME, the spread between ULSD and Brent, the world’s crude benchmark, stood at just under $1 per gallon at the Monday settlement. A year ago, it was a bit more than 28 cents, as diesel has risen far more than crude during this recent run.

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