ExxonMobil and Chevron release quarterly earnings!

The two U.S. energy giants released their Q2 earnings: ExxonMobil’s stock fell 1.4%, while Chevron’s rose 2%. Both companies posted record Q2 profits. However, ExxonMobil’s growth fell short of expectations—primarily because its substantial Middle Eastern operations, which account for a relatively high share of its portfolio, dampened the gains from increased output in U.S. shale and other regions. Chevron, by contrast, has minimal exposure to the Middle East, and its results surpassed market expectations. One particularly noteworthy figure in Chevron’s earnings report: U.S. shale oil production costs have dropped 25% compared to 2025. With Trump offering no clear policy direction and the Middle East situation remaining highly ambiguous, the most critical consequence is that U.S. energy interest groups have yet to coalesce around a strong, unified lobbying agenda. Market supply restoration remains uncertain: Trump is waiting for U.S. firms to ramp up production before finalizing his next steps; meanwhile, U.S. firms are waiting for Trump to clarify his plans before deciding whether to launch full-scale production increases. U.S. energy companies hold extensive operations across the Middle East. They can tolerate a gradual return to stable supply—but if stability proves permanently unattainable, they possess fallback capacity in domestic shale oil and inventories elsewhere. A pivotal “tipping point” looms: as U.S. shale oil output continues expanding—expanding, expanding, and expanding further—until it reaches a certain threshold, the United States will no longer be able to bear the geopolitical weight of keeping strategic straits open. At that juncture, a lobbying coalition comparable in influence to the military-industrial complex will likely emerge. Oil is an entire industrial chain. Sustained shale oil expansion would continuously stimulate related domestic industries. Shale oil is light crude. Discovered in 2014, the shale oil revolution stalled early on due to persistent difficulties finding markets—meaning significant room remains for “industrial optimization” in the U.S. shale sector. Industrial optimization works like this: early mobile phones (e.g., brick-like “big brothers”) offered extremely poor cost-performance ratios; only after intense market competition did devices shrink dramatically, gain powerful new functions, and see costs plummet exponentially. Shale oil is light crude. If the market is forced to embrace light crude, infrastructure must be upgraded: refineries and downstream industries must purchase new equipment and rebuild entire production lines from scratch. Consequently, shale oil’s extraction-and-refining costs remain heavily constrained by the fact that “industrial optimization across the value chain remains severely underdeveloped”—leaving ample room for cost reduction. A key advantage of shale oil lies in its ability to be sold bundled with natural gas. That is why Chevron’s reported 25% drop in U.S. domestic shale oil production costs is so significant: if supply shortages persist, the market will be compelled to adopt shale oil—and across the entire upstream-downstream chain, production costs will continue falling amid competitive pressures. The tipping point has not yet arrived. ExxonMobil’s profit growth reached 60%. Yet this 60% must be netted against supply-chain procurement costs—meaning a broad swath of supporting enterprises also benefited. Why hasn’t the tipping point been reached? As of Q2, ExxonMobil’s Middle Eastern exposure caused its overall performance to reflect “gains offset by declines”—indicating that ExxonMobil, and the broader U.S. petroleum industry, remain willing to accept the reopening of strategic straits. Surging oil prices boost profits; returning to normal prices reduces them—this volatility is tolerable. What is *not* tolerable is a scenario where growth stems overwhelmingly from “exponential expansion” of domestic shale oil, followed by sudden, full reopening of the straits—leading to oversupply, unsellable shale oil, and cascading bankruptcies among domestic producers. Iran and the United States are engaged in a perilous game. Once U.S. corporate business models undergo fundamental transformation, America’s priority will shift from “restoring strait navigation” to “ensuring the straits remain closed.” This objective can be achieved simply by continually imposing ever-harsher demands on Iran—the Islamic Revolutionary Guard Corps will then do Washington’s work for it.

Resisting Trump’s pressure, America’s two energy giants refuse to raise oil output.

Facing the worst energy crisis in decades, U.S. energy giants ExxonMobil and Chevron are resisting White House pressure to increase oil production, steadfastly adhering to their pre-war strategy of prioritizing financial returns over output growth. According to the UK’s Financial Times, although President Trump recently urged the oil industry to expand drilling, the chief financial officers of both supermajors have explicitly stated they will not alter their core business plans in response to recent oil market turbulence. Company executives emphasize that their current strategic priority remains expanding free cash flow—not merely boosting production capacity. The Iran war has sharply curtailed oil output across the Gulf region and disrupted refining operations across the Middle East and beyond, triggering an energy shock that risks exacerbating global inflation. International oil prices have surged to $126 per barrel—the highest since the outbreak of hostilities—while U.S. gasoline prices have climbed above $4 per gallon. This directly undermines Trump’s campaign pledge to cut fuel prices below $2 per gallon and reduce living costs for American households. To alleviate supply shortages, the U.S. government has ordered releases from the Strategic Petroleum Reserve. Meanwhile, investors note that although oil companies have rejected upstream production appeals, they are capitalizing on high diesel and other refined-product prices—running their refineries at record utilization rates to maximize capital returns amid market volatility. Sticking to established strategy, refusing to alter plans for short-term crises In response to government appeals, both giants affirmed that their operational plans across major producing regions remain unchanged. Neil Hansen, ExxonMobil’s CFO, told the Financial Times that the company’s strategy in the Permian Basin—the dominant U.S. oil-and-gas region—“has not changed.” He added: “We truly don’t need to shift into higher gear, because we’re already running at top speed. That doesn’t mean we aren’t evaluating expansion potential—but objective constraints exist.” Chevron’s finance chief, Eimear Bonner, likewise stressed to the Financial Times, “The crisis has not prompted us to change any plans.” She clarified that Chevron possesses the capability to grow in the Permian Basin—but such growth is not part of its current strategy. Its core focus remains growing free cash flow—not increasing output.