US oil giants ExxonMobil, Chevron beat profit forecasts as wars in Iran, Ukraine spike domestic refining
Written By Bobins Vayalil Abraham
Two US oil giants, ExxonMobil and Chevron, both beat analyst expectations for quarterly profit on Friday as domestic gasoline prices surged amid supply constraints caused by the ongoing conflicts in the Middle East and the Russia-Ukraine war. The closure of the Strait of Hormuz and recent attacks on refineries in Saudi Arabia and Russia have knocked out fuel-making capacity, sending refining margins sky-high for the American companies.
According to Reuters, for the first time in at least six years, Exxon, the largest US oil producer by market capitalization, has been earning more from refining than from exploration and drilling. Chevron's third-quarter downstream earnings also reached their highest point over the same time frame.
ExxonMobil’s refining division earned a record $9.05 billion in the period, almost five times higher than a year earlier.
Shell, TotalEnergies and BP also topped third-quarter profit estimates this week. BP reached a record.
The Associated Press noted that besides the disruption caused by the wars, Exxon is also seeing strong production in its fields in Guyana and the Permian Basin in the Southwest. Chevron said its results include one month of production in Venezuela, where it’s making a big investment.
Utilization at Exxon's US Gulf Coast refineries was at 100%, and U.S. Gulf Coast diesel production was at the second-highest on record.
Exxon CEO Darren Woods said the company is looking for more ways to expand its existing refining facilities, along with upgrading them to produce more fuels or chemical feedstocks.
Chevron said it earned $9.9 billion, or $5.06 per share, during the third quarter, as revenue surged 36% to $67.8 billion. Its results handily topped estimates.
Crude utilization at Chevron's US refineries totaled 98%. Those refineries processed more than 1 million barrels of crude oil per day. The company said it set production records at its Eastern Mediterranean and Australian assets.
"Margins will stay a bit elevated, maybe into next year," Chevron Vice Chairman Mark Nelson said during a conference call with analysts.
Chevron, the second-largest US oil company, has had a presence in Venezuela since 1923. Last month, it announced it will invest $7 billion over the next five years in Venezuela.
While big oil reaped the benefits of the disruption caused by the two conflicts, the high cost of diesel and gasoline is among voters' biggest frustrations ahead of midterm elections scheduled for November 3.
The Trump administration has pressed oil companies to take action to soften the blow on consumers, but it has so far failed to show results at the pumping stations.
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