ExxonMobil and Chevron, top U.S. oil producers, have issued warnings that global supplies of diesel and other refined products are expected to remain tight for the latter half of the year. This tightness is attributed to ongoing disruptions stemming from the Iran war, which continues to affect energy flows and contribute to elevated fuel prices. Both companies reported substantial increases in their second-quarter refining profits, benefiting from factors like falling fuel inventories, reduced exports from China, and refinery outages in Russia, all of which bolstered refining margins.
Exxon reported adjusted downstream earnings of $4.1 billion, though some investors had anticipated even stronger results given its extensive refinery footprint. The company narrowly missed consensus estimates for its second-quarter earnings. Chevron, however, surpassed expectations, with its refining segment's profits surging to $4.9 billion, a 500% increase compared to the same period last year, driven by soaring gasoline and diesel prices. Chevron's CEO, Mike Wirth, warned that upward pressure on product prices is likely to persist into the third quarter and potentially beyond, as demand for distillates like diesel and heating oil is not expected to decline.
Despite operating U.S. refineries at high capacity and achieving record diesel production, Exxon's CEO, Darren Woods, stressed the critical need for shipping through the Strait of Hormuz to normalize to increase global crude supplies. Woods also noted that the current high utilization rates of refineries are unsustainable long-term, indicating that refining challenges will continue globally. Both companies acknowledge the need for scheduled maintenance, with Chevron anticipating a $175 million to $225 million hit to downstream earnings in the third quarter due to downtime, while Exxon expects lower maintenance compared to the previous quarter. Following the earnings reports, Exxon shares were down about 1%, while Chevron's shares rose approximately 2%.
