By: Jon Costello
Note to readers: Figures are in U.S. dollars unless otherwise noted.
The oil market has apparently made up its mind. After the late-February strikes on Iran throttled the Strait of Hormuz and left roughly 8 million barrels a day of crude with nowhere to go, Brent spiked about 65%. It has since round-tripped to pre-war levels of about $74 per barrel, its lowest level since the war began on February 28, amid hardening conviction that a U.S.-Iran deal will reopen the waterway any day now. The market is pricing a clean reopening, right on schedule.
I am not convinced. The gap between what the tape assumes and what the Gulf can actually deliver may be an opportunity. A reopening is neither as close nor as clean as the market would have us believe. Tankers have to start entering the Gulf for shut-in wells to be brought back on production. Minesweeping alone takes weeks after any ceasefire, redirected tankers need 30 to 40 days to reposition, and Tehran can keep the mere threat of attack alive to throttle passage at will. If you think flows through the Strait remain constrained and Brent will eventually be bid higher—as we do—then the only real question for investors is how to capture that upside in a durable manner.
That is the case for Parex.
Parex Resources (PXT:CA) produces every one of its barrels in Colombia and ships them out through Caribbean ports into the Atlantic basin, none of which transit the Strait of Hormuz. Yet the company prices off Brent, so a constrained Strait flows straight into its realizations. Investors can therefore obtain full price exposure with zero transit risk. For a crude bull nervous about flows at the chokepoint, that is a rare combination.
What Changed Since I Passed on the Shares at C$21
I avoided Parex in January at C$21.13. At the time, the oil price outlook was bearish. The company’s production had fallen from 54,356 boe/d in 2023 to the mid-40,000s, proved-developed reserve replacement was a dismal 41%, and management had not yet regained credibility after its 2024 Arauca disappointment. A standalone Parex in slow decline did not clear my bar as a long-term investment.
The company is now a different business. In the first half of 2026, Parex agreed to buy Frontera Energy’s (FEC:CA) Colombian assets for roughly $750 million, adding about 37,000 boe/d. The deal closed on June 1. It then struck a partnership with Ecopetrol (EC) on the Casabe and Llanito blocks in the Magdalena Basin. Together, these asset acquisitions raise the company’s production guidance to 82,000 to 91,000 boe/d in the second half, nearly double its former base. The production-decline problem I discussed before the deals has become a scale-and-deleveraging problem. The question of management’s credibility has not vanished, but the business beneath is fundamentally different.
Adding to Parex’s allure is the decisive change in the political backdrop that occurred last weekend. President Petro’s freeze on new exploration licensing held back the entire Colombian sector for years, but his movement has lost power. On June 21, the pro-hydrocarbon candidate, Abelardo de la Espriella, narrowly defeated the Petro-aligned Iván Cepeda. His administration is expected to restore exploration contracting, ease the regulatory posture toward operators, and rebuild Ecopetrol, Parex’s partner on the Magdalena blocks and across the Llanos. The result points to a materially less restrictive operating environment for every E&P in the country, and a Colombian producer is the most direct beneficiary of that shift.
We believe that energy investors who had written off Colombia should look again, and Parex, as the largest independent oil producer in the country, is the natural place to start. Much of this is not yet in the share price.