Should you follow Buffett and chase high oil stocks? A detailed account of the Oracle’s love-hate history with oil equities…

What would happen if Russia’s 5 million barrels per day of crude oil exports vanished from the global market? Some analysts speculate that oil prices could surge to $150 per barrel—or even higher—while today’s price stands just above $110. Buffett appears to be preparing for precisely this scenario. According to Berkshire Hathaway’s latest filing with the U.S. Securities and Exchange Commission (SEC), Berkshire purchased approximately 61 million shares of Occidental Petroleum on three consecutive days—March 3, 4, and 5—even as the stock price soared to its highest level in two and a half years. Overall, besides Occidental Petroleum, Buffett has previously invested in other oil stocks, including PetroChina, ExxonMobil, ConocoPhillips, and Phillips 66 (a company spun off from ConocoPhillips), as well as Chevron. Yet not all these investments were fortunate enough to generate ‘X-fold returns in X years’... Buying PetroChina: Eightfold return in four years! Let’s begin with this legendary eightfold return. In April 2003, Buffett began aggressively purchasing shares of PetroChina’s H-shares. Starting in April 2003—the peak of the SARS outbreak—Buffett bought PetroChina’s H-shares seven times consecutively over 15 days, ultimately acquiring 2.34 billion shares and becoming PetroChina’s second-largest shareholder. His total investment cost less than $500 million—roughly $0.20 per share, or about RMB 1.60 at the time’s exchange rate. By the end of 2004, Buffett’s investment had nearly doubled. Later, at Berkshire’s annual meeting, Buffett recalled that his investment in PetroChina was his first-ever purchase of a Chinese stock. At the time, he had never met PetroChina’s management team nor attended any of its earnings conferences; he simply read PetroChina’s annual report in his office—and decided to invest nearly $500 million. This investment may have been driven by several factors: 1. PetroChina accounted for 3% of global oil production—equivalent to 80% of ExxonMobil’s output. Its profits at the time totaled $12 billion, placing it among only five U.S. companies whose earnings matched PetroChina’s. 2. At the time of purchase, PetroChina’s total market capitalization stood at $35 billion—just three times its prior-year earnings (i.e., a P/E ratio of 3). Buffett believed its fair valuation should be around $100 billion. Compared with other oil companies—ExxonMobil’s P/E ratio then stood at 16—PetroChina appeared extremely cheap. 3. PetroChina maintained relatively low debt levels, and planned to distribute 45% of its earnings as cash dividends. 4. From a fundamental perspective, PetroChina possessed an exceptionally strong business—backed by licensing monopolies and facing virtually no competition. 5. Macroeconomically, China’s economy was booming, and the global economy was riding an upward Kondratiev wave. Commodity prices—including oil—were rising sharply: oil traded at just over $20 per barrel in 2002 but surged to over $60 per barrel by 2005—a 2–3x increase—fully reflecting oil’s intrinsic value. Buffett held PetroChina for over four years. Starting in July 2007, he began gradually selling his shares at around HK$12 each. By October 2007, he had fully exited his position, pocketing $4 billion in profit—an eightfold return in four years. Looking at oil price trends, international crude broke through $30 per barrel in 2003 (having previously done so in 1981 and 2000) and peaked at an all-time high of $147.27 per barrel in 2008—marking the heart of oil’s bull cycle.

ConocoPhillips: Buffett’s most disastrous macro bet

Factors driving this rally included: rapid industrialization in emerging economies such as China and India, generating massive oil demand; years of underinvestment in exploration, resulting in newly discovered reserves failing to keep pace with consumption growth; OPEC’s production constraints, rendering supply inflexible; and persistent political instability across the Middle East. These factors led many market participants to believe the world was entering a new era of ‘peak oil’—where supply would soon plateau while demand continued to rise, keeping oil prices elevated for the long term. Buffett clearly bought into this narrative. In his 2007 shareholder letter, he wrote that he held an optimistic outlook on energy prices over the long term. 2. Recognition of ConocoPhillips’ asset value Against the backdrop of high oil prices, ConocoPhillips’ vast proven reserves became highly attractive. Each barrel of underground oil reserves carried substantial value under a $140-per-barrel price assumption. From a valuation perspective, if oil prices remained sustainably above $100 per barrel, ConocoPhillips’ profitability would be exceptionally robust—potentially rendering its stock price undervalued relative to its intrinsic worth. Buffett likely based his purchase decision on precisely such calculations. 3. Profit mechanism Buffett’s plan: sustained high oil prices would ensure strong profits and cash flow for ConocoPhillips; the company would reward shareholders with increased dividends and share buybacks; and Berkshire, as a major shareholder, would benefit from steady dividend income and share-price appreciation. This logic is straightforward—it is, at its core, a macro-driven investment predicated entirely on oil price forecasts. 4. The irony in hindsight This investment followed Berkshire’s acquisition of Pacificorp—a utility company Buffett purchased based on his forecast of persistently high energy prices. Both decisions shared identical underlying logic: betting on continued strength in fossil fuel prices. This reveals that, in the mid-2000s, Buffett had formed a strong, consistent view on energy price trends—and repeatedly applied it across different investments. IV. Payment method and position size Unlike the Pacificorp acquisition, the ConocoPhillips investment was executed via open-market purchases of common stock. Beginning in 2006, Buffett gradually built a position in ConocoPhillips. By early 2008, Berkshire held approximately 84.9 million shares—about 5.7% of ConocoPhillips’ total outstanding shares. At prevailing share prices, the total cost amounted to roughly $7 billion. At $7 billion, this position represented about 3–4% of Berkshire’s then-over-$200-billion asset base. While not a fatal exposure, it still constituted a significant holding. Given that this was purely a market-trading position—not a controlling stake—its scale reflects the strength of Buffett’s conviction regarding energy price trends. Yet position size is only part of the story. More critically, this investment exposed Berkshire to concentrated risk tied solely to one macro variable: oil prices. When oil prices fluctuated, the entire position’s value swung dramatically. V. What due diligence did he conduct? Buffett’s research focused primarily on supply-demand analysis of global energy markets and on assessing ConocoPhillips’ asset value. He examined global oil supply-demand balance sheets, emerging-market demand growth trends, production decline rates at major oilfields, and the investment cycles required for new exploration.

Cantor Fitzgerald Trims Holdings in ConocoPhillips

Apr 11, 2026

Cantor Fitzgerald Investment Advisors reduced its stake in ConocoPhillips by 13.8% in Q4 2025, indicating cautious institutional sentiment despite the energy producer's stock performance.

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