Big Oil Companies Report Record Profits Amid High Oil Prices
We are still in the early innings of the earnings season, with roughly a third of S&P 500 companies having returned their second quarter scorecards. And, it’s shaping up to be yet another bumper earnings season: according to FactSet data, 86% of those companies have exceeded Wall Street’s earnings projections while 80% have beaten revenue expectations.
The Energy sector is reporting the highest earnings growth clip of all 11 market sectors at 128.2% Y/Y, well above the S&P 500 average at 37.9%, thanks in large part to higher oil prices amid the Middle East conflict. Brent crude averaged $92.55 per barrel in the second quarter, 45% above Q1 2026 average at $63.68/bbl. At the sub-industry level, 4 of the 5 sub-industries in the energy sector are reporting double-digit earnings growth: Oil & Gas Refining & Marketing (249%), Integrated Oil & Gas (166%), Oil & Gas Exploration & Production (104%), and Oil & Gas Storage & Transportation (11%). Only the Oil & Gas Equipment & Services sub-industry is reporting an earnings decline at -16% Y/Y. Two of the world’s largest oil and gas companies reported second quarter earnings on Friday.
Chevron Corp. (NYSE:CVX) reported the highest quarterly profits in six years, easily beating Wall Street’s expectations. Chevron reported Q2 2026 earnings of $6.06 per share, comfortably beating the FactSet consensus estimate of $5.55 while revenue jumped to $70.06 billion (+56.2% Y/Y), beating Wall Street's $62.72 billion projection. Upstream earnings came in at $8.2 billion, good for a tripling year-over-year, while downstream earnings surged to $4.9 billion, up from $737 million the previous year. Total production reached 4.07 million barrels of oil equivalent (boe) per day, with U.S. output hitting an all-time high of 2.08 boe. Production rose 20% Y/Y, driven by legacy Hess assets, the Permian Basin, and the Gulf of America. The company also achieved $1.5 billion in deal synergies from its Hess acquisition, six months ahead of schedule. Chevron maintained its steady capital return plan during the quarter. The company repurchased $3 billion in shares, paid out $3.5 billion in dividends, and paid down debt by a record $.4 billion during the quarter. Chief Financial Officer Eimear Bonner confirmed that full-year share repurchase targets will remain locked between $10 billion and $20 billion.
Exxon Mobil (NYSE:XOM) reported mixed results with Q2 Non-GAAP EPS of $3.52 missing by $0.11 mainly due to heavy refinery maintenance limiting fuel margin capture and price volatility, while revenue came in at $116.02 billion, up from $81.51 billion for last year’s corresponding quarter. Second quarter net profit was $14.5 billion, climbing to a four-year high driven by high oil prices and tight global supply, while free cash flow came in at $17.2 billion, exceeding expectations.
ExxonMobil reported its highest upstream production in over 20 years (excluding Middle East's disruptions), powered by record output in the Permian Basin where output surpassed 1.8 million boepd, matching a planned 9% compound annual growth rate through 2030. ExxonMobil returned $9.4 billion to shareholders in the second quarter, consisting of $4.3 billion in dividends and $5.1 billion in share repurchases. The company announced it has realized $16.3 billion in cumulative structural cost savings relative to 2019 levels, driven by workforce reductions, digital tools and facility upgrades.
The supermajor also highlighted several major milestones for its Guyana operations. The company’s 5th Floating Production, Storage, and Offloading (FPSO) vessel (Uaru project) has officially set sail, with production startup firmly on track for fourth-quarter 2026, which will add 250,000 barrels per day (Kbd) of production capacity.
ExxonMobil noted that current operations across the first four FPSOs are consistently producing approximately 100,000 barrels per day above their investment basis, achieving a 98% year-to-date reliability performance. According to ExxonMobil's chief financial officer, the company has fully recovered its initial $55 billion investment in Guyana since 2014, two years ahead of projections. Exxon will now book ~100,000 fewer barrels per day for cost recovery starting in Q3 2026, pivoting the contract into a 50/50 profit-oil split that will increase direct revenue for both the consortium and Guyana.
Meanwhile, progress for the Longtail project in Guyana remains on schedule, which will mark Guyana’s first offshore development specifically targeting non-associated natural gas rather than oil. The layout targets up to 1.2 billion cubic feet of gas per day alongside 250,000 barrels of condensate, with a 2030 first-production window.
Attention will now shift to the next wave of supermajor earnings, with BP scheduled to report on August 4, followed by ConocoPhillips on August 6. Investors will be looking beyond another likely jump in profits to gauge how management teams expect the current oil rally to hold up through the second half of the year. Capital spending, shareholder returns, production guidance, trading performance and any changes to long-term investment plans will be closely scrutinized after Chevron and ExxonMobil demonstrated just how quickly higher crude prices have translated into stronger cash flow and record capital returns.
By Alex Kimani for Oilprice.com
Big Oil Warns Global Fuel Stocks Are Running Dangerously Low
- Big Oil warns the real shortage is refined fuels, not crude, with Exxon, Shell and Chevron saying diesel and gasoline markets remain extremely tight despite softer oil prices.
- Refining capacity has been hit by wars and export restrictions, with disruptions in the Middle East and Ukraine, China's fuel export caps, and Russia's diesel export ban squeezing global fuel supplies.
- Diesel shortages could worsen as refinery maintenance begins, with refineries already operating near maximum capacity.
The world is running short on fuels—the warning was first issued by some analysts who were watching the physical market rather than futures charts. Now, Big Oil is joining the chorus of warnings, with Shell, Exxon and Chevron all saying that prices at the pump are set to stay higher, regardless of where crude oil prices go.
“The constraint pain point in the energy system is refining," Exxon’s chief financial officer Neil Hansen told Bloomberg in an interview last week. This, according to him, is “something that perhaps the market isn't fully focused on.”
Indeed, most oil market observers have focused exclusively on futures prices even when the gap between those and physical oil prices has been quite substantial as a result of the export flow disruption in the Middle East that has now spread from the Strait of Hormuz to the Red Sea as well. Futures prices are currently down from last week’s peak on President Donald Trump’s latest declaration of peace talks—but physical markets are in a very different place, and that is especially true of refined products.
Bloomberg reported last week that the wars in the Middle East and Ukraine, plus China’s caps on fuel exports—and Russia’s ban on diesel exports—have effectively slashed global refining capacity by as much as 10%. This may not sound like much at first glance, but it is a significant enough number to have some observers worried.
As early as April, Energy Aspects and Rystad Energy warned that global fuel inventories were getting squeezed by the Middle East war since the region, besides being a leading crude oil exporter, is also a major exporter of refined products. Now, more analysts are sounding the alarm as the U.S. and Israeli war against Iran enters its sixth month.
“We’re in a diesel supply crunch right now because none of the Persian Gulf refineries can get product out,” Rabobank senior energy strategist Joe DeLaura said, as quoted by the Wall Street Journal last week. “Crude oil is just the input, but diesel is the everything the industrial economy runs on,” he also said. “Everything in agriculture, everything in construction, everything in mining. Also everything on the supply and distribution side runs on diesel.”
Exxon’s chief executive gave the fuel squeeze story a dramatic twist last month, saying on a call with analysts that “I've never seen the available capacity relative to demand as low as it is today,” and adding, as quoted by Bloomberg, that “It's going to take a while for the industry to climb its way out of that hole.”
Shell’s Wael Sawan, meanwhile, told CNBC that “Today, what you're seeing is all the price signals that we are short on diesel and gasoline. Which means we need to be able to now reoptimize at the refining side,” the top executive also said.
In further comments on the state of fuel inventories globally, Chevron’s chief financial officer, Eimear Bonner, told Bloomberg that “The geopolitical uncertainty has tightened markets and is reinforcing the importance of reliable supply. The shock absorbers that have mitigated the volatility up until now, those continue to be drawn down.”
This is why crack spreads are running at record highs, U.S. refineries are also running at record highs—and this is a problem because maintenance season typically begins in September and lasts through October; and maintenance season means a dial-down in processing rates. In the past, refiners have postponed maintenance season to capture a period of stronger demand, but this time, this may be unwise.
According to Bloomberg, Exxon’s refineries along the Gulf Coast have been running at a utilization rate of 95%, and Chevron’s refineries have been running at 97%. Shell’s refineries, meanwhile, have actually topped 100% utilization rates, clocking in at 102% over the second quarter. This utilization rate cannot be maintained over an extended period of time without the risk for adverse consequences rising, which means there will be maintenance—and lower fuel production.
“Fall is particularly difficult, kind of like a perfect storm right now,” the owner of a freight brokerage told the Wall Street Journal. “When we have the harvest and we have the early heating demand, and we also have the war, the tight squeeze on diesel is going to directly affect basically the entire economy,” Hannah Hurckes from Boss Lady Logistics told the publication.
Early in the war, some analysts predicted crude oil prices of up to $200 per barrel. This never happened because of President Trump’s regular announcements about escalation or de-escalation, regardless of how events develop on the ground. Meanwhile, in physical markets, the squeeze on supply out of the Middle East has left its impact on fuel production—while demand has remained strong because of the fundamental nature of fuels for any economy.
By Irina Slav for Oilprice.com
Trump Orders Oil Companies to Cut Gas Prices, Targets Chevron CEO
President Donald Trump demanded that U.S. oil companies immediately lower gasoline prices on Monday after crude futures plunged following his decision to suspend another planned military strike on Iran. In a Truth Social post, Trump instructed producers to “get your consumer (retail!) Oil Prices DOWN, NOW!”
Trump singled out Chevron CEO Mike Wirth after the executive appeared on television discussing the company’s business. Trump said Wirth failed to acknowledge the administration’s role in restoring Chevron’s position in Venezuela. “They threw Mike and Chevron out of Venezuela, but now they’re back, far bigger and stronger than ever before, expecting to make a fortune,” Trump wrote.
Chevron resumed operations in Venezuela after the Trump administration reopened access to the country’s oil sector and placed exports under U.S. control. American refiners have since become some of the largest buyers of Venezuelan crude, restoring a market that had largely disappeared under previous sanctions.
Back in the U.S., amid a backlash over prices at the pump, the national average price of regular gasoline stood at about $4.09 per gallon on Monday, according to AAA, down only modestly from last week’s highs despite crude prices falling more than 6% in a single session. Retail fuel prices typically lag changes in oil markets because stations continue selling inventory purchased at earlier wholesale prices.
Monday’s demand follows two earlier interventions by Trump. In June, he called on the Justice Department to investigate gasoline prices after crude retreated from earlier highs. Days later he urged fuel retailers to lower pump prices toward $2.50 per gallon, warning companies that failed to respond would face “big problems.”
West Texas Intermediate crude fell more than 6% on Monday, and Brent crude lost more than 5% after Trump announced a new round of negotiations with Iran and canceled what he described as a planned “massive” military strike. Retail gasoline prices typically adjust more slowly because refiners, wholesalers and retailers continue selling fuel purchased at earlier crude prices.
Chevron, Exxon Mobil, Valero Energy and Marathon Petroleum all reported sharply higher second-quarter profits last week as the Iran conflict lifted crude prices and refining margins. Trump’s latest demand places those earnings alongside falling oil prices as his administration pushes the industry to pass lower crude costs through to consumers.
By Charles Kennedy for Oilprice.com
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