Oil giants report record profits amidst geopolitical tensions

Both companies are increasing dividends for investors as oil prices have consistently stayed above $100 per barrel for months. Brent oil is currently trading just below $118 per barrel, nearing its peak of $126 reached since the U.S. and Israel initiated conflict with Iran in late February.

Exxon shares have risen 52% and Chevron shares 50% since the beginning of the year. BP, another major oil company, also reported an 18-year high in profits.

The average price of regular gasoline has increased 40% for consumers since the conflict began, adding pressure on voters ahead of the midterm elections where inflation is a key concern.

Former President Donald Trump, who pledged to lower energy costs to below $2 per gallon by 2024, has recently celebrated the high profits. During a rally on October 24th, Trump remarked, “Our country is making hundreds of billions of dollars because of what’s happened in the Middle East.”

ExxonMobil CEO Darren Woods attributed the high prices to disruptions including the closure of the Strait of Hormuz and the impact of the war in Ukraine, which has reduced Russia’s refining capacity by approximately half. He stated, “That shortage of refining capacity and availability to the world is what’s driving product prices as high as it is, and frankly, diesel is the key crunch point here because it is so critical to economic growth.”

The average nationwide price for diesel fuel has risen 78% since the beginning of the year, with diesel futures soaring 130%.

Both Exxon and Chevron are operating their refineries at maximum capacity to meet demand. The Trump administration has attempted to lower prices through various measures, including allowing the use of dyed diesel, pressuring European allies to release reserves, and a deal with Russia for diesel supplies. These efforts have not yet resulted in significant price reductions. ExxonMobil’s Woods noted that refineries are already operating at record utilization rates.