The world’s largest oil and gas companies are bracing for their lowest quarterly earnings in three years, as weak prices and shrinking margins weigh on their bottom lines.
It continues a downward trend after hitting record highs in 2022.
But beyond the immediate financial hit, a deeper contradiction is playing out in the global oil industry that exposes the fundamental tension between US president Donald Trump’s push for “drill, baby, drill” and the economic realities of oil production.
Trump has wasted no time rolling back his predecessor’s climate policies and championing a fossil fuel boom. Since returning to office, he has declared a national energy emergency, lifted restrictions on LNG exports and revoked USD$300 billion in green energy funding.
While his administration pushes for more domestic drilling, Wall Street remains skeptical. Drilling isn’t cheap, and new oil projects only make financial sense when prices are high enough to justify the investment.
Analysts estimate that most new US drilling needs oil prices of around USD$80 per barrel to break even. The situation is similar in Canada, notwithstanding across the board 25% tariffs.
Yet, European Brent crude prices are expected to average just $74 per barrel in 2025, down from $81 in 2024, which means oil companies are more likely to focus on cost cutting and maximizing shareholder returns through dividends and share buybacks that do nothing to increase output.
“We will bring prices down, fill our strategic reserves up again, right to the top, and export American energy all over the world,"US president Donald Trump
As fourth-quarter earnings roll in, oil giants are expected to post sharp profit declines compared to a year ago:
According to analyst expectations ExxonMobil is projected to report $6.85 billion in profit, down from $9.96 billion last year while Chevron is expected to post $3.87 billion, down from $6.45 billion in the same quarter. Shell and BP have both warned of weaker trading results and declining refining margins.
The earnings slump comes as post-pandemic demand slows and China’s economic struggles weigh on oil prices. Meanwhile, weaker refining margins are eating into profits, with Exxon estimating a $1.75 billion hit from lower refining earnings alone.
Despite Trump’s fossil fuel mantra, years of volatile pricing and policy swings have made oil companies cautious about expanding drilling at all costs.
Ironically, some oil executives are frustrated with Trump’s aggressive rollback of Biden-era climate policies — not because they oppose fossil fuel expansion, but because they’ve already spent billions on projects like carbon capture and alternative energy that were already on economically shaky ground.
For instance, the Pathways Alliance consortium of Canada’s largest oil companies is proposing to pump CAD$16 billion into carbon capture technology, hoping to tap into a carbon removal market projected to be worth USD$150 billion annually.
But now, with Trump slashing funding in the US, those subsidies — on both sides of the border — could vanish, putting those projects at risk.
Executives are also concerned that Trump’s withdrawal from the Paris Agreement could isolate the US from global energy negotiations, reducing opportunities for American companies to shape the future of carbon markets — such as they are.
One anonymous executive told Reuters: It’s critical that any conversation about addressing climate change must be global in nature, and also recognize that America is the world leader in both energy production and emissions reductions.”
Now the US — indeed, global — oil industry finds itself caught between Trump’s pro-drilling agenda and the financial realities of a low-price environment. For now, Big Oil is playing it safe by focusing on efficiency, protecting investor returns and keeping an eye on the long-term uncertainties of policy swings. There are sure to be many over the next four years.
“We will bring prices down, fill our strategic reserves up again, right to the top, and export American energy all over the world," Trump said during his inaugural address. "We will be a rich nation again, and it is that liquid gold under our feet that will help to do it."
Whether Trump’s energy policies will ultimately lead to a US drilling surge remains to be seen. But for now, the quarterly profits of the world’s biggest oil majors — mostly American — just don’t add up.