Oil giants post record profits amid war

Drivers paying higher prices at the pump are funding a historic profit surge for the largest oil companies in the world. The five supermajors, ExxonMobil, Chevron, BP, Shell, and TotalEnergies, reported combined adjusted net income of $56.3 billion for the third quarter. This figure represents the third-highest total in their history.

The earnings spike stems from conflicts in the Persian Gulf and Russia that have disrupted global energy markets. International oil prices have risen nearly 60% since the United States and Israel attacked Iran in late February. Fighting in the Middle East and Ukrainian strikes have sidelined roughly 10% of the world’s fuel-making capacity. The remaining operational plants are capturing enormous margins.

ExxonMobil’s refining division generated a record $9.05 billion in the third quarter. That amount is almost five times higher than the figure from a year earlier. Chevron’s refineries earned $4.93 billion, also a company record and four times the previous year’s profit. For BP, more than half of its $8.46 billion in adjusted net income came from its oil refining and trading unit.

Despite the cash influx, the US-based supermajors have been cautious with share buybacks. ExxonMobil raised its dividend for the 44th consecutive year and pledged to maintain $20 billion in annual buybacks. Chevron kept its quarterly buybacks at $2.5 billion, the low end of its full-year guidance. Instead, Chevron used the windfall to reduce debt for the second consecutive quarter.

ExxonMobil Chief Executive Officer Darren Woods said the company is focused on breaking out of the commodity cycle. “We don’t get over exuberant and commit to things that we don’t feel like we can sustain for the long-term,” Woods said during a call with analysts. Chief Financial Officer Neil Hansen described the profit surge as a reward for increasing production. The company has increased Gulf Coast distillate production by 40% since 2019.

Chevron Vice Chairman Mark Nelson told investors that margins are expected to moderate as refinery runs recover. “Exports are reduced due to the conflicts and, quite frankly, the products businesses have less shock absorbers,” Nelson said. He added that the recovery of export flows will take time.

The political backdrop is complicated by the approaching midterm elections. US President Donald Trump has told voters that fuel prices will come down “very soon.” This follows comments made earlier in the year where he criticized the industry for making too much money. The high cost of living has turned traditional Republican states like Texas, Kansas, and Alaska into battleground areas.

Stocks for the major producers rose following the reports. ExxonMobil shares climbed as much as 2.8% in New York, while Chevron gained 2.2%. BP advanced 1.8% in London. RBC Capital Markets analyst Biraj Borkhataria noted that the reluctance to boost share repurchases reflects the optics of spending during an energy crisis.

ExxonMobil’s third-quarter earnings of $4.23 per share beat analyst estimates by 10 cents. Chevron reported net income of $5.28 per share, exceeding estimates by 35 cents. Both companies cited strong operational performance in their reports.

The companies are using the current market conditions to justify long-term investments. Chevron is on track to produce 300,000 barrels a day from Venezuela by the end of this year. Its production costs there are under $20 per barrel. ExxonMobil increased its stake in the Rovuma LNG project in Mozambique to 50% and plans a final investment decision later this year.