Profits for nine of the world’s largest oil companies fell 15.1% in the January-September period, bringing their total profit down to $182.1 billion.
US-based ExxonMobil and Chevron, Dutch Royal Dutch Shell, British bp, French TotalEnergies, Italian Eni, Russian Rosneft, Norwegian Equinor, and Saudi Arabia’s national oil company, Saudi Aramco are among the world’s top oil firms.
Saudi Aramco reported 11.2% less earnings in the first nine months of the year, relative to the same period of last year. The company revealed $83.9 billion in profit while ExxonMobil announced profit of $26.1 billion, down by 8%.
Royal Dutch Shell’s profit dropped 4.5% to $20 billion, while Chevron saw a 24.4% decline to $14.5 billion, and TotalEnergies’ profit shrank 27.7% to $11.8 billion, during the same period.
Russian oil giant Rosneft reported a 13.8% drop in profit, falling to $8.7 billion, while bp’s profits declined 28.5% to $7.7 billion, and Equinor’s profits fell 26.5% to $6.8 billion.
During this period, Italian Eni experienced the biggest fall in profit. The company revealed a profit of $2.5 billion in the nine month period, down 47.9% from last year.
Overall, the companies’ net revenues totaled $182.1 billion, down from approximately $214.5 billion in 2023.
– High costs lead to shrinking profit margins
Many different factors contributed to the decrease in profit margins of international and national oil companies, Fereydoun Barkeshli, the president of the Vienna Energy Research Group told Anadolu.
Barkeshli pointed out that one of the reasons for this narrowed profit margins is the inability of the international oil industry to keep up with technological innovations, leading to a rapid increase in production costs.
He also highlighted that environmental regulations and restrictions have negatively impacted exploration and production costs citing that oil companies are required to undergo longer procedures and adhere to compensation plans in order to balance environmental conditions.
Explaining that the narrative of the end of the oil era has also become a significant factor driving companies away from oil investments, Barkeshli noted that many oil companies prefer to invest in alternative sectors, such as renewables or nuclear energy, rather than reinvesting their profits into the oil sector.
Moreover, he marked that the growing expectations of an oversupply in the market due to the major oil discoveries in Guyana and Brazil and supply leakages despite the official figures published by the OPEC secretariat, have played an important role in this trend.
‘Markets did not treat well the producers on the demand side either. China’s economy struggled to confirm 4% growth. The same was the case for India and most of the Eurosia,’ Barkeshli added.
Referring to national oil companies like Saudi Aramco and Rosneft, Barkeshli cited that their pricing structures differ from those of international oil companies.
He continued, saying that national oil companies generally have lower production costs due to government support and favorable financial conditions while international oil companies are subject to more transparent financial constraints and obligations.
A national oil company’s prime objective is to meet a certain price and revenue target for the government as the major stakeholder of the company, he emphasized.
‘I believe that in certain cases, profit reporting by some companies is politicized. In fact it is complicated to establish a certain profit margin for companies that are under sanctions.’ he concluded.
