ExxonMobil posts record profits as Middle East conflict sustains energy market disruption

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When Exxon reported on 31 July, it said second-quarter earnings were $14.5 billion, or $3.48 a share, with adjusted earnings of $14.7 billion, or $3.52 a share. That was up 67% from the first quarter and more than double the same period a year earlier, but still below the $3.60 a share expected by analysts tracked by LSEG. Reuters said the stock fell about 2% in pre-market trading, and chief financial officer Neil Hansen said the shortfall reflected “extreme swings” in commodity prices and refining margins that had been difficult to model. (investor.exxonmobil.com)

The scale of the windfall owed much to the war’s effect on crude and fuel markets rather than to any broad easing in supply conditions. Reuters said Brent averaged $96.68 a barrel during the second quarter, 23% above the first three months of the year, while Al Jazeera, citing Kpler analyst Muyu Xu, said the same benchmark had averaged $78.38 in the first quarter and $66.71 in the second quarter of 2025. KPBS reported that the conflict had choked off exports of refined fuels including petrol, jet fuel and diesel, while Ukrainian attacks on Russian refining infrastructure deepened the global shortage. (investing.com)

That has left integrated oil groups with large refining networks in an unusually strong position. The Los Angeles Times reported that Tom Seng of Texas Christian University saw Exxon and Chevron as among the best placed beneficiaries because they produce crude and process it, while Timothy Fitzgerald of the University of Tennessee said not all refineries had been able to secure enough feedstock since the conflict began. The paper said diesel in the US was about 41% more expensive than it had been before the Strait of Hormuz was blocked. Exxon, for its part, said its refineries ran at high rates in the quarter and delivered record diesel production. (latimes.com)

Exxon’s profit surge came despite significant disruption to its own Middle East operations. Reuters reported that around 450,000 barrels a day of lost output was linked to liquefied natural gas production in Qatar after Iranian attacks on energy facilities there. Another 150,000 barrels a day was offline at a UAE oilfield, while a further 250,000 barrels a day was being produced but could not yet be booked as revenue because shipping routes were still constrained. Those losses were partly offset by record Permian production of more than 1.8 million barrels of oil equivalent a day, and the company said a fifth floating production unit in Guyana remained on course to start up in the fourth quarter, adding 250,000 barrels a day of capacity. (investing.com)

Even so, the quarter threw off enough cash for Exxon to keep rewarding shareholders while reducing leverage. According to the company, cash flow from operations reached $23.6 billion and free cash flow totalled $17.2 billion. Exxon paid $4.3 billion in dividends, bought back $5.1 billion of shares and cut net debt by $7 billion during the quarter. Reuters noted that Chevron and Shell both beat analysts’ forecasts over the same period, while TotalEnergies was broadly in line, showing that Exxon’s earnings miss was a company-specific blemish in what was otherwise a bumper quarter for the sector. (investor.exxonmobil.com)

The political response was swift once those numbers landed. On 3 August, President Donald Trump said Exxon and Chevron were “making too much money” and should “give some of that back to the public”, according to Reuters and The National. The National said the two companies had generated a combined $26.5 billion in quarterly profit and that US crude prices had risen about 20% since strikes on Iran began on 28 February. With average petrol prices above $4 a gallon, Reuters later reported that the White House was preparing to extend a Jones Act waiver in an attempt to loosen fuel-shipping bottlenecks, although Rapidan Energy Group’s Bob McNally said the move would probably trim prices by only pennies a gallon. (thenationalnews.com)

The calls for a windfall tax have not gone away. KPBS reported that Senator Sheldon Whitehouse had proposed one in the US, while several European countries were weighing similar measures. Darren Woods pushed back on Exxon’s earnings call, calling such levies a “misguided policy” and saying the company had previously cancelled planned European investments because of an earlier windfall tax there. For now, that helps explain why Exxon has been using much of its war-driven cash haul to fortify the balance sheet and fund long-life projects rather than to launch a new drilling spree: management appears to be betting that the supply shock will eventually pass, even if August’s shipping data suggested it was lasting far longer than hoped. (kpbs.org)

Source: Noah Wire Services