Exxon Mobil and Chevron reported surging second-quarter profits on Friday, the latest sign of how the US-Iran war is reshaping the global energy economy. Exxon’s profit doubled to $14.53 billion, boosted by record diesel production, while Chevron’s net income nearly quadrupled to $12.07 billion from $2.5 billion a year earlier.
Exxon brought in $116.02 billion in revenue, up 42%, and posted adjusted earnings of $3.52 per share, 8 cents below Wall Street estimates. Chevron’s revenue jumped 56% to $70.06 billion, with adjusted earnings of $6.06 per share, 50 cents above analyst forecasts.
The windfalls reflect a conflict now in its sixth month that has halted most shipping through the Strait of Hormuz, a waterway that previously served as a delivery route for a fifth of the world’s oil and natural gas. With supplies constrained, Brent crude, the international benchmark, soared from about $70 to above $100 a barrel for much of March, April and May, reaching $126 at one point.
The price surge rippled through the wider economy. Gasoline, diesel and jet fuel prices climbed sharply, supplies ran low in some countries, leading to sporadic fuel rationing in Australia and government office closures in Nepal and Sri Lanka. Six of Europe’s largest oil companies posted combined first-quarter profits of $22 billion, more than 40% higher than a year earlier.
‘We’re kind of firing on all cylinders, which is good, because the world needs it,’ Chevron CEO Mike Wirth told CNBC, while warning that global energy markets are running out of time as the war expands and inventories fall. Wirth said the threat to oil supplies has spread beyond the Strait of Hormuz, with Iran’s Houthi allies in Yemen attacking shipping in the Red Sea, a crucial alternative route for Saudi Arabia’s exports.
ExxonMobil CEO Darren Woods said there is a ‘disconnect between crude prices and pump prices’, a theme likely to resonate politically. ‘There are constituencies around the world who are having a very good crisis, and the oil producers are one of them,’ said Patrick Galey.
The bumper results are likely to draw scrutiny from lawmakers as consumers struggle with high fuel costs. The White House has floated reopening refineries to ease gasoline prices, which have become a political liability for President Donald Trump ahead of November’s midterm elections, with a Reuters-Ipsos poll this week finding just one in three Americans support the war.
Sources: PBS NewsHour (AP), CNBC, The National
Author: Middle East Desk
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