NEW YORK – Big Oil reaped more than US$50 billion (S$64 billion) in windfall profits as conflicts in the Persian Gulf and Russia roiled energy markets and drove refining results to record highs.
ExxonMobil Holdings, Chevron, BP, Shell and TotalEnergies all surpassed third-quarter expectations with combined adjusted net income of US$56.3 billion, driven by an unprecedented fuel-supply crisis that drove pump prices to record highs.
Motorists’ pain at the pump is providing outsized profits for oil supermajors while fanning discontent as US President Donald Trump and his Republican Party head into midterm elections that will determine control of Congress.
American voters consistently cite the cost of living as a top concern, with high fuel prices turning traditional Republican strongholds including Texas, Kansas and Alaska into battleground states.
International oil prices are up almost 60% since the US and Israel attacked Iran in late February, and refining has emerged as an additional chokepoint in the global energy supply chain.
The fighting in the Middle East and Ukrainian strikes in Russia have sidelined about 10% of the world’s fuel-making capacity, handing enormous profits to plants that remain operational.
ExxonMobil’s refining division earned a record US$9.05 billion during the third quarter, almost five times higher than a year earlier, according to a statement on Oct 30. Meanwhile, Chevron’s refineries raked in US$4.93 billion in profit, the highest on record and four times more than a year ago.
For BP, more than half its US$8.46 billion in adjusted net income came from the unit that includes oil refining and trading. Earlier in the week, Shell and Total also disclosed blockbuster results.
ExxonMobil shares rose 1.6% before the start of regular trading in New York. Chevron rose 1.3%. BP climbed as much as 1.8% in London. Shell and Total also rose.
Trump has batted away concerns over petrol and diesel prices, which are higher on average during his second term than under his predecessor, Joe Biden, saying they will come down “very soon” at a rally in Texas this week.
A few days earlier, he praised US oil companies for making “a freaking fortune” for the country, an apparent U-turn after criticising them for “making too much money” this summer.
More volatility ahead
Yet, with the Iran conflict entering its ninth month, the disruptions to global energy markets show little sign of easing despite more ships now passing through the Strait of Hormuz.
Until now, markets have leaned heavily on supplies from strategic and commercial stockpiles. But with these buffers running low, price volatility is forecast to escalate.
ExxonMobil, which operates the largest refining system outside China, reported its fourth-highest overall profit in the company’s 156-year history. The company’s adjusted third-quarter earnings of US$4.23 a share were 10 US cents higher than the average analyst estimate.
ExxonMobil raised dividends for the 44th consecutive year, and pledged to maintain US$20 billion in annual buybacks.
Chief financial officer Neil Hansen said the profit surge was less a windfall than a reward for ramping up production at a time when it is most needed. ExxonMobil has increased Gulf Coast distillate production 40% since 2019 as a result of heavy investment since 2020, when rivals sold off fuel-making facilities or converted them to biofuel plants.
“The most meaningful response to those higher global commodity prices that we can offer as a company is to pull every lever that’s available to us to increase supply,” Hansen said during an interview.
ExxonMobil is “putting more diesel on the market in a very strained environment today”.
Chevron also notched its fourth-highest quarterly profit in company history. Its third-quarter net income of US$5.28 a share was 35 US cents higher than the average analyst estimate.
The company maintained share buybacks at US$2.5 billion for the quarter, the low end of its full-year guidance range. For the second consecutive quarter, Chevron executives funnelled windfall profits primarily into debt reduction.
“We don’t react to upside or downside, we don’t move things around,” chief financial officer Eimear Bonner said during an interview. “For now, we’re sticking with our longstanding financial priorities and we’re not making any changes.” BLOOMBERG
