Big Oil Pockets Near-Record Profits but Spending Restraint Signals Long-Term Doubts

Big Oil is reaping near record cash windfalls from the eight-month-old Iran war, but Western energy producers’ reluctance to ramp up spending reveals persistent doubts about the industry’s long-term outlook.

BP, Chevron, Exxon Mobil, Shell and TotalEnergies reported combined net profits of $56 billion in the third quarter, driven by surging oil and gas prices, record-high refining margins and strong trading results.

BP posted its highest quarterly profit ever, $8.5 billion, as earnings from its refining business rose tenfold from a year earlier. For the other majors, the quarter was generally their second-strongest on record, behind only the extraordinary gains booked following Russia's invasion of Ukraine in February 2022.

Market conditions remain incredibly favourable. Brent crude LCOc1 has surged around 60% to $114 a barrel since the start of the Iran conflict on February 28, while benchmark European natural gas prices have climbed to their highest levels since late 2022. Diesel prices, meanwhile, remain close to September's all-time high above $200 per barrel as fuel markets continue to grapple with refinery outages and disrupted trade flows.

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