Energy companies are resisting the temptation to significantly ramp up spending despite a surge in oil prices driven by geopolitical tensions, opting instead for measured growth while focusing on operational efficiency, RBC Capital Markets strategists said in a note on Wednesday.
Crude producers remain cautious about committing capital to major expansion projects, even as elevated crude prices provide a near-term earnings boost, RBC analysts said, citing executives speaking at the RBC Global Energy, Power & Infrastructure Conference.
The analysts said the key determinant for future investment decisions is not current spot prices but longer-dated crude contracts.
Companies indicated that sustained strength in the back end of the oil futures curve through 2027 and beyond would be required before they would materially increase long-term production plans.
Though some operators may accelerate existing developments, industry leaders largely refrained from signaling aggressive output growth, reflecting uncertainty about the durability of current geopolitical disruptions and their potential impact on global economic activity and future oil demand.
"The back end of the curve remains the North Star," RBC analysts said.
Meanwhile, refiners expressed confidence that downstream profitability will remain robust. RBC said both North American and European operators pointed to tightening product inventories and resilient fuel demand, supporting expectations that refining margins will remain elevated.
There is also growing optimism about Canadian energy exports as buyers seek greater diversification of supply amid ongoing geopolitical risks.
RBC said executives highlighted the strategic importance of expanding access to Asian markets through a wave of liquefied natural gas projects on Canada's west coast, including LNG Canada, Cedar LNG, Woodfibre LNG, and Ksi Lisims LNG.
The bank said energy-importing countries are prioritizing supply security, creating long-term opportunities for Canadian producers.
On the natural gas front, LNG export growth is expected to remain the dominant driver of demand through the remainder of the decade. However, power demand from artificial intelligence-linked data centers continues to attract attention.
RBC forecasts that data centers could account for 6 billion to 7 billion cubic feet a day of North American gas demand by the 2030s.
Companies across the energy industry emphasized productivity improvements over expansion.
RBC said advancements in drilling technology have halved well construction times compared with a decade ago, while better use of existing infrastructure and AI-enabled optimization are helping operators reduce costs and increase asset utilization.
However, oilfield service firms painted a more expansionary picture. RBC said that despite producers maintaining conservative production guidance, service providers expect drilling activity to accelerate, particularly in Canada, where higher commodity prices and growing export opportunities are supporting demand for rigs and pressure-pumping equipment.