Big Oil reaped more than $50 billion in windfall profits as conflicts in the Persian Gulf and Russia roiled energy markets and drove refining results to record highs. Exxon Mobil Holdings Corp., Chevron Corp., BP Plc, Shell Plc and Total Energies SE all surpassed third-quarter expectations, with combined adjusted net income of $56.3 billion, driven by an unprecedented fuel-supply crisis that pushed 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. 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 choke point 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.
Exxon Mobil's refining division earned a record $9.05 billion during the third quarter, almost five times higher than a year earlier. Chevron's refineries raked in $4.93 billion in profit, the highest on record. For BP, more than half its $8.46 billion in adjusted net income came from the unit that includes oil refining and trading.
Trump has batted away concerns over gasoline and diesel prices, saying they will come down "very soon" at a rally in Texas. A few days earlier he praised US oil companies for making "a freaking fortune" for the country, an apparent U-turn after criticizing them for "making too much money" this summer. With the Iran conflict entering its ninth month, disruptions to global energy markets show little sign of easing, and with strategic and commercial stockpiles running low, price volatility is forecast to escalate.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing