Big Oil Set to Reap Profit Bonanza From Soaring Fuel Prices

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Or sign-in if you have an account.vgziorwi77eaqqp[k8fq1p94_media_dl_3.png Bloomberg, NYMEX(Bloomberg) — The world’s Big Oil companies are set for another bumper set of quarterly results after the Iran war sent crude prices soaring — and fuels even higher.THIS CONTENT IS RESERVED FOR SUBSCRIBERS ONLYSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.SUBSCRIBE TO UNLOCK MORE ARTICLESSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.REGISTER / SIGN IN TO UNLOCK MORE ARTICLESCreate an account or sign in to continue with your reading experience.Access articles from across Canada with one account.Share your thoughts and join the conversation in the comments.Enjoy additional articles per month.Get email updates from your favourite authors.THIS ARTICLE IS FREE TO READ REGISTER TO UNLOCK.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one accountShare your thoughts and join the conversation in the commentsEnjoy additional articles per monthGet email updates from your favourite authorsSign In or Create an AccountEarnings from the five supermajors combined will likely be the third-highest on record, analyst estimates show, as they reaped gains from the biggest supply disruption in history. Crude spiked above $120 a barrel at the end of April, and while prices later pulled back, the refined-product market has remained strong.“Refining is a material tailwind for second-quarter earnings,” RBC Capital Markets energy analyst Biraj Borkhataria said, adding that margins have grown even stronger since the end of the period.Get the latest headlines, breaking news and columns.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try againThat’s a boon for large integrated oil companies, with Texan giant ExxonMobil Holdings Corp. poised to post its biggest refining profits in almost four years after it invested heavily in expansion along the US Gulf Coast.For the Europeans, increased volatility has provided huge opportunities at BP Plc, Shell Plc and TotalEnergies SE, which all have extensive trading operations that allow them to thrive during periods of market upheaval.Analysts expect the five global majors — which also include Chevron Corp. — to post $45.8 billion in profit for the period, the most since 2022, when Russia’s invasion of Ukraine drove a surge in energy prices. ExxonMobil and Chevron will likely lead the pack, in part due to accounting revisions on derivative positions that brought large paper losses in the first quarter.The Iran war upended global energy markets when it effectively closed the vital Strait of Hormuz at the end of February, shutting vast quantities of crude and products inside the Persian Gulf. Buyers had to stump up for replacement barrels from elsewhere, particularly the US, creating a raft of opportunities for traders to cash in. The squeeze on petroleum products has also been exacerbated in recent months by waves of Ukrainian attacks on fuel plants in Russia, driving refining margins to records.“If you look at oil prices plus refining margins, then we are close to the highs at the time the Russia-Ukraine war started,” RBC’s Borkhataria said. That market reality is reflected in Big Oil’s share performance. TotalEnergies has jumped more than 30% this year, while BP and Shell have gained more than 20%. The two US majors are up about 25%.While crude markets retreated in May and June as Persian Gulf producers managed to ship more barrels through Hormuz and Chinese demand languished, prices for gasoline, diesel and jet fuel remained elevated. That trend continues, threatening to stoke inflationary pressures around the world.There will be “structurally higher prices for jet fuel, diesel and other distillates, at least for a couple of years,” James West, a New York-based analyst at Melius Research, said in an interview. That’s likely to contribute to the political backlash against Big Oil as President Donald Trump prepares for midterm elections in November. Gasoline prices in the US are once again above $4 a gallon, and Trump has ordered the Justice Department to look into pump pricing.As far as crude markets are concerned, much rests on the trajectory of the Middle East war, with prices up again this month as attacks escalated.West sees crude averaging $80 to $90 a barrel for the rest of the year, though Brent currently exceeds that range. The global benchmark averaged $96.79 a barrel in the second quarter.This advertisement has not loaded yet.Notice for the Postmedia NetworkThis website uses cookies to personalize your content (including ads), and allows us to analyze our traffic. Read more about cookies here. By continuing to use our site, you agree to our Terms of Use and Privacy Policy.