Exxon Signals $5B Q2 Earnings Boost on Higher Oil Prices
Synopsis
The energy giant expects second-quarter earnings to receive a roughly $5 billion boost from stronger oil prices and improved refining margins following heightened geopolitical tensions in the Middle East.
Exxon sees 2Q profit jump from higher oil, strong refining Exxon Corp's (XOM.N) second-quarter profit is expected to increase on the back of stronger crude oil prices and improving refining margins which boosted the company's energy business in the April-June quarter, a regulatory filing ahead of its July 31 earnings release showed.
The oil producer anticipates that higher oil prices will boost its upstream business's profit by between US$3.5 billion and US$3.9 billion from the previous quarter.
The Additional gains from higher oil refining margins and favorable timing effects to thetune of between US$2.6 billion and US$3.3 billion will be followed by derivative contract gains related to physical cargo delivery approximately worth US$2.6 billion.
However, between US$0 and US$1 billion in supply disruption costs stemming from conflict in the Middle East will offset these gains.
Brent Rally Shapes Energy Earnings
The earnings forecast comes after a bumpy ride for global oil markets.
Brent crude, the West's benchmark, averaged US$96.68 a barrel in the second quarter, briefly pushing above US$109 in April as anxieties about global supplies of the oil grew from tensions over the narrow waterway of the Strait of Hormuz.
It transports about 20 percent of the world's seaborne oil, and plays a vital role in the export of oil from the UAE, Kuwait, Saudi Arabia, Iraq, Qatar, and Iran.
Companies based in Australia also benefit from the rising Brent prices by offering inflated fuel prices and also through rising shares of major companies in the Australian Stock Exchange (ASX), like the energy firms Santos and Woodside Energy, which are sensitive to world oil prices.
July Results in Focus
By estimates by LSEGanalysts Exxon is likely to post adjusted earnings of US$15.7 billion, significantly more than the last quarter.
Earlier, the company announced that derivative positions have had an impact in the previous quarter's results but the same impact is expected to turn around as physical cargo is delivered.
The update is provided following the International Energy Agency (IEA) flagging that oil market tensions have increased in the current quarter as Opec and its allies pledged to increase supply by a month from August to ease oversupply over the following months.
Investors will be closely following the details of production, refining performance and cash generation, particularly in one of the stronger quarters for the oil price so far this year as Exxon releases the full second-quarter results on July 31.
Source: Reuters
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Pooja Malik is a business journalist with over six years of experience covering startups, entrepreneurship, and emerging trends. She has previously worked with leading media platforms such as YourStory Media and BW BusinessWorld, where she reported on business, policy, and market developments. Currently, she serves as Editor at The Inspirepreneur Magazine, where she writes and edits stories across business, lifestyle, and travel, with a focus on clarity, accuracy, and reader relevance.
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