Big Oil Earnings Season Marks A Return To Basics With Lower Profits

Core Insights - The quarterly earnings season for major oil companies revealed a trend of lower profits compared to previous years, signaling a return to oil and gas fundamentals [1][2][4] - The global crude oil benchmark Brent has seen a nearly 16% decline year-to-date, raising concerns about a potential oil supply glut [3][5] Financial Performance - Major oil companies reported annual profit declines ranging from 2% to 12%, with specific figures including Chevron (-2%), TotalEnergies (-2%), BP (-6%), Shell (-10%), and ExxonMobil (-12%) [4][5] - Saudi Aramco, the largest by market capitalization, reported a 2.3% decline in profits [5] Investment Trends - Industry leaders emphasized the need for increased investment in oil and natural gas to meet ongoing demand, which is expected to remain above 100 million barrels per day beyond 2040 [6][7] - TotalEnergies' CEO highlighted that the energy transition requires more energy with fewer emissions, indicating a continued reliance on oil and gas [8] Strategic Shifts - BP's CEO announced a strategic shift back to traditional hydrocarbon investments, reducing its focus on low-carbon initiatives after previous costly ventures [9][10] - Other companies, such as Chevron and Shell, have also significantly cut their low-carbon spending, indicating a broader trend within the industry to prioritize higher returns from hydrocarbon projects [10][11] Market Outlook - The industry is facing a potential energy shock if oil project investments are not managed properly, as demand continues to grow [7] - Executives from various companies have expressed a cautious approach to low-carbon spending, citing disappointing demand and inadequate global policies as barriers to investment [11]