Refining is booming! ExxonMobil and Chevron’s Q3 profits surge.

On October 30, ExxonMobil and Chevron released their third-quarter 2026 financial results, reporting net profits of $15.413 billion and $9.924 billion, respectively—an increase of 104% and 180% year-on-year. More notably, the source of these profits deserves attention. ExxonMobil’s Energy Products segment earned $7.169 billion in the quarter—slightly higher than its Upstream segment’s $7.088 billion—a first in six years. Chevron’s downstream operations generated $4.931 billion in profit, with its U.S. downstream business alone earning $3.585 billion—reaching multi-year highs. Amid global energy market volatility and rising crude oil prices, market attention would normally focus on exploration and production. Yet this earnings season has thrust refining into the spotlight. Why did these two oil majors earn the most precisely from the segment that processes crude oil into gasoline, diesel, and jet fuel? 01 Diesel Shortage This surge in refining profits stems primarily from tightening global refined product supply. Ongoing U.S.-Iran tensions continue to disrupt energy transportation in the Middle East; passage through the Strait of Hormuz is constrained, and Russian refineries have repeatedly come under attack. The impact extends beyond crude oil exports—Middle Eastern and Russian diesel and jet fuel supplies to international markets have also been severely affected. Refinery shutdowns or reduced operating rates have led to sharp declines in refined product exports, significantly shrinking the available spot supply. Diesel, in particular, is in short supply. It is widely used in freight transport, construction machinery, agricultural production, and industrial equipment—its demand closely tied to economic activity. Even when prices rise, some heating oil demand may be deferred, but diesel consumption cannot contract sharply in the short term. With supply falling and demand proving inflexible, inventories are depleting rapidly. The International Energy Agency’s October report noted that the global diesel market tightened continuously during the first three quarters of 2026: global diesel exports averaged approximately 4.7 million barrels per day over the first nine months—down 10% year-on-year. By mid-September, Singapore’s wholesale diesel price surpassed $200 per barrel, while European and U.S. prices briefly approached $220 per barrel. Refined product prices rose markedly faster than crude oil, widening the margin—i.e., the difference between the value of refined products and the cost of crude inputs—for refiners. That is the core driver behind rising refining profits. Refineries purchase crude oil and process it into gasoline, diesel, jet fuel, and other products. Crude oil constitutes the cost; refined products constitute revenue. The spread between the two determines profitability in the refining segment. When supply gaps widen for diesel and other refined products—and their prices rise faster—the refiner’s profit margin expands accordingly. U.S. refiners happened to catch this wave. According to data from the U.S. Energy Information Administration (EIA), average U.S. refinery utilization rates from May through September exceeded 95%—the highest for this period since 1998. Meanwhile, U.S. refining capacity has contracted in recent years: several large refineries have closed, reducing industry-wide operable capacity—making supply tightness more readily reflected in refined product prices. 02 Capacity Is Key to Capturing the Opportunity Rising refining margins are visible to all players—but converting favorable market conditions into actual profits depends on how much effective capacity a company holds. ExxonMobil’s advantage lies in its Gulf Coast refinery cluster and its long-established capability to optimize product slates. Its Energy Products segment earned $7.169 billion in Q3—up from approximately $1.84 billion a year earlier. The company attributed this growth primarily to improved refining margins and asset optimization.

Will the U.S. stock market’s Q3 earnings season be ‘more bad news than good’? EPS in this sector could surge by 115.7%!

Performance of the three major indices, via http://Investing.com 1. Sector Forecasts for Q3 According to FactSet data, the energy sector is expected to post the largest year-on-year growth, with Q3 earnings per share (EPS) surging 115.7%. In terms of revenue, rising oil and natural gas prices are expected to drive a 35.6% year-on-year increase in sector revenue—WTI crude averaged $91.62 per barrel in Q3 2022, up 30% year-on-year. Q3 EPS forecasts across sectors, via FactSet The industrial sector is projected to rank second, with EPS growing significantly by 24.2%. Airlines, aerospace & defense firms lead this group. In terms of revenue, although the industrial sector is highly sensitive to macroeconomic conditions, sales are still expected to grow 12.7% in Q3—ranking fourth overall. Q3 revenue forecasts across sectors, via FactSet Financial firms—including banks—are expected to see EPS decline 11.8% year-on-year, as loan defaults rise, equity trading slows markedly, and M&A and IPO activity dwindles. Revenue is forecast to grow only 2.6% year-on-year. The communication services sector—which includes telecom companies, media, entertainment, and online media service providers—is expected to perform worst, with EPS forecast to fall 13.2%. 2. Companies with Largest Q3 EPS Forecast Upgrades FactSet data shows ExxonMobil and Chevron are expected to be the biggest contributors to year-on-year profit growth in the energy sector, with both oil majors anticipated to report triple-digit profit growth and double-digit revenue growth. Other energy firms poised for notable Q3 improvement include Occidental Petroleum and ConocoPhillips. Occidental’s EPS is forecast at $2.68—up 208% from $0.87 a year ago—while ConocoPhillips expects EPS growth of 117% year-on-year. Within the industrial sector, Delta Air Lines, Southwest Airlines, and United Airlines stand out for relatively strong fundamentals. Delta is forecast to report Q3 EPS of $1.56—up 420% year-on-year. With the Russia-Ukraine conflict ongoing, Raytheon, Lockheed Martin, and Northrop Grumman are also noteworthy industrial stocks, having raised their Q3 EPS expectations. 3. Companies with Largest Q3 EPS Forecast Downgrades On the downside, declining EPS expectations in the communication services sector are largely driven by Meta (META) and Netflix. Meta’s EPS is forecast to fall 40% to $1.93, while Netflix’s EPS is expected to drop 31.7% to $2.18. The technology sector may be most vulnerable to rising interest rates and inflation. Intel faces the steepest EPS decline among tech firms, forecasting $0.35 per share—down 79.5% from $1.71 a year ago; NVIDIA is expected to report a 40% year-on-year EPS decline—the latest firm to lower its EPS outlook. Some non-discretionary consumer staples stocks—particularly those heavily reliant on U.S. consumer strength—are also expected to deliver disappointing results.

Colombia Ecopetrol's net profit jumps 86% in Q3

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