Why have international oil majors seen a sharp decline in profits in the third quarter, and how are they seeking survival amid this 'winter'?

Affected by the decline in global oil prices, international oil majors saw a sharp drop in profits in the third quarter of this year, each seeking survival amid this 'winter'. The global energy and petrochemical industry is undergoing severe challenges. Profits across major oil companies generally declined in Q3: Equinor (Equinor ASA) fell by 57%, Dow Inc. by 48%, Chevron by 20%, Shell by 10%, ExxonMobil by 6%, BP by 3%, TotalEnergies by 2%, and BASF by 2%. The sustained decline in oil and natural gas prices has severely undermined the profitability foundation of upstream operations for these oil majors. Delayed price transmission and weak downstream demand have significantly eroded refining business profits. I. Collective Profit Contraction Across Majors Q3 financial results from international oil companies show an overall marked decline. Chevron’s adjusted profit dropped from $4.531 billion to $3.627 billion—a decrease of $904 million, or 20% year-on-year. ExxonMobil’s adjusted profit stood at $8.058 billion, down 6% year-on-year—yet its absolute profit remains far ahead of peers. European oil companies showed mixed performance. Shell’s adjusted profit was $5.432 billion, down 10% year-on-year. TotalEnergies’ adjusted net profit was $3.98 billion, down 2% year-on-year—the smallest decline among the group. BP’s underlying replacement cost profit was $2.21 billion, down 3% year-on-year. Equinor’s adjusted profit plummeted from $2.191 billion to $932 million—a staggering 57% drop—far exceeding the decline rates of the five largest majors. BASF’s earnings before tax and special items amounted to €533 million, down from €545 million a year earlier—a 2% decline. Dow Chemical’s net profit was $124 million, down from $240 million a year earlier—a 48% decline. Despite the steep year-on-year profit declines, senior executives at these energy and petrochemical giants offered positive assessments of their own performance, expressing strong confidence in their development strategies despite the complex market environment. II. Divergence Across Business Segments: Upstream Under Pressure, Downstream Showing Bright Spots From a business-segment perspective, upstream operations were most directly impacted by falling oil prices. ExxonMobil’s upstream profit was $5.679 billion—slightly higher than Q2 but still lower than the prior-year quarter. Shell’s upstream adjusted profit was $1.804 billion, below the $2.443 billion recorded a year earlier. In contrast, downstream operations delivered standout performance for some companies. TotalEnergies’ downstream segment posted an adjusted net income of $1.067 billion—up 76% year-on-year from $605 million. Its refining and petrochemicals division reported adjusted net income of $687 million—up a dramatic 185% year-on-year. Chemicals-related businesses faced severe challenges. ExxonMobil’s chemicals profit plunged 79%, dropping from $2.457 billion a year ago to just $515 million in Q3 this year. Shell’s chemicals business posted adjusted quarterly profit of $550 million—up from $463 million a year earlier—but its cumulative profit for the first three quarters ($1.117 billion) was far below last year’s $3.163 billion. New energy businesses are beginning to show potential. Shell’s Renewables & Energy Solutions segment turned from a $162 million loss a year ago to a $92 million profit this quarter.

Soaring oil prices have ignited profits for energy giants: ExxonMobil achieved its highest quarterly profit in four years—but still missed expectations; Chevron exceeded expectations to post its highest quarterly profit in at least six years.

Geopolitical tensions in the Middle East have disrupted global energy supply chains, driving both crude oil prices and refinery margins sharply upward—and delivering robust second-quarter results for America’s two largest oil majors. Yet between their outsized profits and market expectations, the two firms delivered markedly different outcomes. On Friday local time, ExxonMobil released its Q2 financial report: adjusted profit reached $14.7 billion—a 67% sequential increase and its highest level in four years—yet still fell short of Wall Street expectations. Chevron, meanwhile, delivered an earnings beat: its adjusted profit hit $12 billion—the highest quarterly figure in at least six years. Both companies benefited from rising international oil prices and improved refining margins in Q2. With U.S.-Iran tensions restricting shipping through the Strait of Hormuz, global concerns over energy supply intensified. Brent crude averaged $96.68 per barrel in Q2—up 23% from Q1. However, geopolitical risks proved a double-edged sword. ExxonMobil holds substantial assets in the Middle East, and some production capacity was affected; Chevron, with comparatively low Middle Eastern output, reaped greater profit gains from high oil prices. Following the earnings release, ExxonMobil’s stock fell roughly 2% in pre-market trading, then narrowed losses—closing down 1.4% during regular trading hours. Chevron’s stock rose about 2% pre-market and extended gains slightly during regular trading—ending up 2.2%. ExxonMobil’s profit hits a four-year high—but refining and upstream segments still miss expectations ExxonMobil’s Q2 adjusted net income totaled $14.7 billion, with earnings per share (EPS) of $3.52—a more than 100% year-on-year increase—but below the $3.60 EPS forecast by analysts tracked by LSEG. ExxonMobil CFO Neil Hansen stated that the company’s core operational performance remained strong, yet quarterly results were impacted by “highly volatile commodity prices and margins”—factors difficult to predict accurately. CEO Darren Woods said: “Q2 was challenging, but execution determined the outcome. As market conditions evolve, we’re delivering our products to the regions where demand is most urgent.” By business segment, ExxonMobil’s upstream adjusted profit reached $9.2 billion and refining profit $4.1 billion—both up from Q1—but still below market expectations. RBC Capital Markets analyst Biraj Borkhataria noted that ongoing Middle East conflict continues to affect certain operations—particularly ExxonMobil’s large asset base in Qatar, whose limited LNG export routes may continue weighing on investor sentiment. Strait of Hormuz risks curtail output; Middle East losses offset by U.S. shale ExxonMobil’s total production declined from 4.6 million barrels of oil equivalent per day (boe/d) in Q1 to 4.5 million boe/d in Q2. Approximately 450,000 boe/d of that decline stemmed from Qatar’s LNG operations. Earlier Iranian attacks on energy infrastructure had forced partial LNG capacity offline. Hansen stated: “These facilities remain largely offline, and LNG output has not meaningfully recovered.” He added that Qatar currently maintains domestic natural gas output of about 150,000 boe/d, while an Abu Dhabi field produces roughly 250,000 barrels per day—of which approximately 50,000 barrels per day remain offline.

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