Wall Street analyst Bernstein Research has established $75 per barrel as a reasonable long-term oil price target for equity valuations, pointing to rising marginal costs and declining reserves. Citing a new survey of the 50 largest energy companies globally, Bernstein analyst Neil Beveridge has revealed that higher spot prices and a tightening physical market continue to feed inflation back into the supply chain. This will negatively impact production costs, with the global marginal cost of oil now projected to climb to $77 per barrel, after declining 2% to $69 per barrel in 2025 due to lower production expenses.
The analyst notes that the industry’s average reserve life has fallen to a 20-year low of 10.4 years, which is significantly below the historical average of 13 years. This lack of long-term supply buffer offers a structurally bullish floor for crude prices. Meanwhile, the global industry reinvestment ratio has climbed to 61%, recovering from its 36% trough in 2022. However, reinvestments remain well below the historical 80% to 90% average. The industry is reinvesting less cash into new exploration and production compared to historical averages, thanks to its cautious outlook on long-term demand, in large part due to the ongoing clean energy transition. This lower reinvestment rate and shrinking reserve life could create periods of market tightness and higher spot prices.
The EV revolution is the backbone of the clean energy transition. The International Energy Agency recently reported that global electric car sales grew by 20% to 20.7 million units in 2025—meaning that one-quarter of all new cars sold worldwide were electric. The IEA has projected that EVs will displace more than 5 million barrels of oil consumption per day by 2030.
The same survey underscored that the oil sector remains highly profitable at the current price deck. The average net income breakeven for major producers sits at $50 per barrel, well below the current Brent crude oil price at $96.13 per barrel. Meanwhile, global unit production costs have declined 5% to $35 per barrel of oil equivalent (boe), with average return on capital employed (ROCE) currently sitting at 10%, tracking perfectly in line with the industry’s historical average and cost of capital.
By Alex Kimani for Oilprice.com
More Top Reads From Oilprice.com
- Suriname Wants Two Wins From One Block: Gas Is Done, Oil Could Follow
- India’s Energy Investment Set for Record $170 Billion in 2026
- Uniper Sees Gas Shortage in Winter If Storage Rates Don’t Speed Up
