Continental Resources' Confident Outlook: Navigating Oil Price Volatility in 2025 and Beyond

The oil market’s turbulence in 2025 has left many producers scrambling, but Continental Resources’ co-founder Harold Hamm remains defiantly optimistic. Despite West Texas Intermediate (WTI) crude hovering near $67 per barrel—a far cry from the $80 threshold he identifies as critical for sustained U.S. shale production—Hamm insists the industry is on the cusp of stabilization. His confidence hinges on geopolitical shifts, tariff resolution, and the resilience of American shale. But is his optimism justified?

The Mid-$70s Target: A Balancing Act

Hamm’s repeated emphasis on oil prices rebounding to the mid-$70s per barrel reflects both strategic optimism and economic necessity. Recent data underscores his rationale:
- Tariff Uncertainty: U.S. tariffs on steel and aluminum have inflated drilling costs, squeezing margins. Removing these barriers could reduce input expenses, enabling prices to rise to $70–$75.
- OPEC’s Role: The cartel’s output decisions remain a wildcard. Analysts at Wood Mackenzie project Brent crude to average $73 in 2025, down from $80 in 2024, due to OPEC+ production hikes.

Hamm argues that $70–$75 would stabilize drilling activity, but his $80 breakeven point for new projects looms large. At current prices, Continental and peers face a stark choice: rein in spending or risk eroding shareholder returns.

The Breakeven Dilemma: Costs vs. Profits

The math is stark. Hamm insists $80 per barrel is needed to unlock new production, yet WTI is trading at just $67.16 as of late 2025. The gap highlights two realities:
1. Operational Costs: Rising steel tariffs, labor shortages, and logistical bottlenecks have pushed breakeven costs upward. For many producers outside the Permian Basin, the threshold now exceeds $70–$75.
2. Financial Pressure: Companies like Matador Resources have already cut rigs, and Citigroup’s Scott Gruber warns that a drop to $55–$60 could trigger a loss of 75 oil rigs and daily production declines of 300,000 barrels.

This data query would reveal how CLR’s stock mirrors oil price swings, underscoring the company’s reliance on sustained crude valuations.

Policy Crossroads: Trump’s Trade War vs. Energy Dominance

Hamm’s optimism clashes with the Trump administration’s mixed signals. While praising the administration’s permitting reforms—streamlining approvals to 14–28 days—he criticizes tariffs for inflating drilling costs. The contradiction reflects broader industry tensions:
- Trade Policy Paradox: Tariffs on steel and aluminum, meant to protect domestic industries, have instead raised expenses for oilfield equipment. Halliburton and Baker Hughes report input cost increases of 15–20%.
- Political Priorities: The administration’s push for “energy dominance” through shale production conflicts with its advocacy for lower oil prices to boost consumer affordability.

Industry Context: A Fragile Boom

Hamm’s stance aligns with peers like Pioneer Natural Resources’ Scott Sheffield, who warns that $50 oil would cripple shale’s financial health. Dallas Fed surveys corroborate this, showing producers are already scaling back budgets. Yet, Hamm sees a path forward:
- Permian Premium: Continental’s focus on the Permian Basin, where costs are lower, could shield it from broader market headwinds.
- Debt Management: The company’s decision to prioritize free cash flow over growth—despite Hamm’s “drill, baby, drill” rhetoric—suggests a cautious approach to current price volatility.

Conclusion: Caution Amid Optimism

Hamm’s confidence is tempered by reality. While he believes the mid-$70s target is achievable through tariff resolution and OPEC restraint, the path to $80 remains fraught. Analysts’ $73 Brent forecast for 2025 suggests a prolonged period of sub-$80 pricing, forcing Continental to rely on operational efficiency and selective drilling.

Investors should heed the data:
- Brent’s 2025 forecast: $73 (Wood Mackenzie).
- CLR’s 2024 net debt: $2.3 billion, down from $3.1 billion in 2023, signaling fiscal discipline.
- Permian production growth: Continental’s 2025 output target of 1.2 million barrels per day hinges on $70+ oil.

In this environment, Hamm’s “not too worried” stance is both a strategic narrative and a gamble. For investors, the calculus is clear: bet on stabilization at $70–$75, but brace for volatility until trade wars and OPEC policies align. The shale boom may persist, but only if prices—and politics—cooperate.