Chevron and Exxon beat earnings expectations as refining profits soar on high diesel fuel prices

Houston, on October 30, oil giants ExxonMobil and Chevron exceeded analyst projections for quarterly profits, driven by soaring refining margins. These margins, a hallmark of fuel production, have now surpassed the upstream segments for both companies. The ongoing tensions in the Middle East, particularly the US-Israeli conflict with Iran and Russia's war with Ukraine, have caused disruptions to global energy markets, with fuel prices surging.

The closure of the Strait of Hormuz and attacks on refineries in Saudi Arabia and Russia have impacted fuel production, pushing Exxon and Chevron's margins to new heights. As the largest US oil producer by market capitalization, Exxon now earns more from refining than from upstream activities for the first time in at least six years.

Chevron's downstream earnings also reached their highest point in the same period. Exxon continues to invest in its refineries, including the Baytown complex in Texas, to boost fuel production and is utilizing its trading team to direct supplies globally, according to CFO Neil Hansen. While higher fuel prices burden families and businesses, Exxon's CFO emphasized the company's commitment to increasing supply through every available means.

Politically, these high fuel prices are a contentious issue ahead of the US midterm elections, adding to voter frustration over escalating diesel and gasoline costs. The industry has thus far avoided stringent measures like a diesel export ban previously considered by President Donald Trump. Exxon reported adjusted earnings per share of $4.23, while Chevron earned $5.28 per share.

Both companies are allocating their profits towards debt reduction and strengthening their balance sheets, rather than increasing dividends or share buybacks. Exxon cut $8 billion in debt during the third quarter, with plans to maintain a sustainable and growing dividend over the long term. Chevron has reduced its net debt by nearly $14 billion compared to the end of 2025.

The CFO of Chevron believes in the importance of a strong balance sheet for both high and low prices. The Brent crude spot price fluctuated between $68 and $132 per barrel during the third quarter, highlighting the energy market's volatility. Exxon plans to repurchase $20 billion worth of shares in 2027, matching the levels of the previous two years.

During the earnings calls, executives from both firms may be questioned about potential dividend increases and future investments into new or existing projects.