ConocoPhillips CEO reveals that drilling more today will not result in oil production for up to a year.

• On Tuesday, Ryan Lance, CEO of ConocoPhillips, informed CNBC that drilling for new oil will not provide immediate relief from the current high prices.
• Lance stated that it would take approximately eight to 12 months for new oil to become visible from the drilling that ConocoPhillips started today.
• After the U.S. declared that it was prohibiting Russian oil imports, Lance made his remarks.

On Tuesday, CEO Ryan Lance informed CNBC that drilling for new oil will not provide immediate relief from the global oil price increase, despite starting the process.

In an interview on "TechCheck," Lance made comments about the U.S. banning Russian oil imports, which was announced by President Joe Biden. This occurred after fears of supply shortages caused prices to surge to their highest levels since 2008.

Lance stated that although the oil industry has become more disciplined, increasing production through drilling is not an immediate solution to alleviate supply concerns.

If Lance called ConocoPhillips' board Tuesday and urged them to pump more oil, how long would it take for the company to see the "first drop of new oil" from the ground?

Lance stated that it would take "eight to twelve months" for the project to be completed. He emphasized that it was not a quick process and that they needed to consider the medium and long-term implications. They were currently spending 20% more capital than the previous year and planned to increase production by the same percentage this year compared to the previous year.

The CEO of ConocoPhillips stated that the company may increase its capital expenditure, but emphasized the importance of ensuring that the returns are substantial.

Lance concurred with Vicki Hollub's earlier comments about the inflation and supply chain challenges faced by manufacturers in the U.S.

At CERAWeek by S&P Global, Hollub stated that the industry was in a dire situation due to the pandemic's impact on supply chains globally. She emphasized the need to grow production despite the challenges posed by the pandemic on supply chains in every industry.

Lance, who has led ConocoPhillips for the past decade, described the dire situation facing companies operating in the oil-rich Permian Basin in West Texas and southeastern New Mexico.

Lance stated that across various commodities and categories, there are double-digit inflation rates, including land, trucking, and chemicals imported from Europe. These supply chain issues are negatively affecting our ability.

We need to ensure that the high price of our product is sufficient to attract more capital and encourage growth, but we must monitor the returns," Lance stated. "As any business, we must ensure that the capital we invest generates an adequate return for our shareholders.

Russian import ban

Lance stated that Biden's decision to ban Russian oil imports was "the rational thing" to do in response to the country's invasion of Ukraine. However, Lance also pointed out that it raises a number of medium- and long-term questions for the rest of the world if many other nations also turn away from Russian oil.

If a million or 2 million barrels a day are removed from the market, it could significantly affect the system and cause oil prices to rise even further, predicted the individual, who forecasted WTI crude prices to reach around $124 per barrel and Brent crude prices to hit $128, the international benchmark.

It is wise to increase calls on strategic petroleum reserves to ease some pressure on the system at present, according to Lance.

Lance asked, "What are our plans for the next six months and year to ensure energy security as a country and globally? Are we prepared for any potential scenarios that may arise during that time?"

Releasing strategic petroleum reserves for a short period will provide temporary relief, but it does not address the long-term question.