Exxon Warns Oil Prices Could Hit $160 on Supply Gap

Exxon Mobil Senior Vice President Neil Chapman warned that global oil inventories are approaching "unheard of" lows, potentially pushing physical Brent crude prices to $160 per barrel as a significant supply deficit emerges [1]. Speaking at the Bernstein Strategic Decisions Conference, Chapman noted that strategic reserves and inventory drawdowns have temporarily masked a shortfall of roughly 11 to 12 million barrels per day [1].

Key takeaways

• Exxon warns global oil inventories are near critical lows, with Brent crude potentially reaching $150–$160 per barrel [1].
• Barclays raised its price target on Exxon to $182, while Mizuho lifted its forecast to $175, citing tighter energy markets [1].
• The company reported a 15% increase in total net production and 11% revenue growth year-over-year [1].

Supply constraints and geopolitical risks

Chapman’s comments underscore the growing impact of geopolitical disruptions on crude flows, particularly through the Strait of Hormuz, a route that normally handles roughly 20% of global oil shipments [1]. The International Energy Agency reported that Iran-related closures of the strait have cost the market over a billion barrels, marking the largest oil supply disruption in history [2]. While current inventories have mitigated the impact, analysts suggest the crude futures market is failing to adequately reflect the scale of this disruption [2]. Chapman indicated that once prices reach a certain threshold, demand destruction will occur to rebalance the market, but this may not happen until inventories hit minimum levels [2].

Wall Street upgrades and operational gains

In response to the tightening market, Wall Street has grown more bullish on the energy giant. Barclays analyst Betty Jiang increased her price target to $182 from $163, citing depleting inventories and shrinking OPEC spare capacity, while Mizuho lifted its target to $175 from $159 [1]. Analyst ratings compiled by Intellectia show a consensus of "Moderate Buy," with 12 buy ratings and 7 hold ratings [2]. This optimism follows strong operational performance, including record production from the Permian Basin, continued growth from Guyana, and a 15.8% increase in operating income [1]. Additionally, Exxon is reportedly exploring a return to Venezuelan oil production, evaluating how its heavy-oil expertise could apply to assets there, though significant political and regulatory hurdles remain [1].

Why it matters

The divergence in analyst opinions on Exxon’s valuation highlights broader market uncertainty regarding future oil prices [1]. While some models suggest the stock trades at a discount to intrinsic value due to strong free cash flow and rising oil-price leverage, others argue shares already reflect expected growth and face risks from energy transition pressures [1]. As inventories dwindle, the company’s integrated model spanning production, refining, and chemicals positions it to benefit from potential price spikes, though commodity volatility remains a primary risk for investors [1].