Analysis
ConocoPhillips (COP) is affected by the 2025 tariffs (Liberation Day and reciprocal tariffs) primarily through its Canadian bitumen operations and the supply chain for domestic infrastructure. The company's primary revenue exposure resides in the export of bitumen from its 100%-owned Surmont asset to the U.S. market. Approximately 50% of Surmont's production, or roughly 66.5 MBD, is exported to the U.S., where the 10% "Liberation Day" baseline tariff introduced in April 2025 created a significant headwind on realized prices. Realized bitumen prices for the full year 2025 fell 15% to $40.74 per barrel, a decline driven in part by trade policy uncertainty and regional market volatility affecting heavy oil differentials.
The tariff environment also impacted capital and operating efficiency, specifically through duties on steel and oil country tubular goods (OCTG) used in drilling and line pipe construction. In response to these macroeconomic pressures and to streamline the integration of the Marathon Oil acquisition, ConocoPhillips initiated a significant restructuring in late 2025. This move resulted in $216 million in severance costs and formed part of a broader $1 billion cost reduction and margin enhancement initiative intended to offset headwinds from trade-related inflation and supply chain disruptions.
ConocoPhillips employs a diversified portfolio strategy to mitigate these impacts. While Canadian exports faced penalization, the company's domestic U.S. production—including assets in the Permian Basin, Bakken, and Alaska—benefited from "strengthening differentials" as tariffs on imported crudes made domestic oil more competitive for U.S. refiners. Furthermore, the company leverages its commercial offtake and transportation network to redirect Canadian liquids to alternate markets, such as the Canadian West Coast or local Alberta hubs, when U.S. market conditions are unfavorable. Management continues to monitor the tariff landscape as a key risk to its results of operations and financial condition.
Data
($M, except per barrel data)
| Metric | FY24A | FY25A | Change |
|---|---|---|---|
| Bitumen Realized Price ($/BBL) | $47.92 | $40.74 | (15.0%) |
| Severance Costs | -- | $216 | NM |
| Restructuring & Synergies Run-rate | -- | $1,000 | NM |
Source: Annual Report FY-2025, Transcript FY-2025, Marvin Labs
Financial Impact
- Revenue Impact (Historic): $75M–$150M
- Cost Impact (Historic): $216M–$300M
- Revenue Impact (Forward-Looking): $50M–$100M
Sources
Our primary exposure to the tariffs that were announced last week would have been the sales of our Surmont liquids into the U.S.
If we were to see tariffs, we'd likely see strengthening differentials for Bakken, for ANS, and possibly even the Permian.
We continue to closely monitor the macroeconomic environment, including any impacts from tariffs... for implications to our business, results of operations and financial condition.