Glimpses into high fuel price environment, as told through oil companies’ earnings calls

Likely to the joy of investors (and the dismay of CFOs trying to control input costs and forecast expenses), oil and gas companies are reaping the rewards of high fuel prices. But recent earnings calls offered glimpses into where oil executives think prices may be headed.

Oil giants Chevron and ExxonMobil recently revealed Q3 profits that beat analysts’ expectations, “capp[ing] off a second straight banner quarter for Big Oil,” Reuters reported. ExxonMobil reported quarterly earnings of $15.4 billion, up from $7.5 billion year over year. Chevron’s $9.9 billion in Q3 earnings were up from $3.5 billion a year ago. In fact, major oil companies are so flush with cash that executives are “uncharacteristically wary” about the best way to spend it, according to Bloomberg.

Fuel prices have spiked as the US war in Iran caused disruptions to oil transport routes in the Middle East. As CFO Brew reported in March near the onset of the war, surging oil prices have “knock-on effects that could prove material to many businesses further down the line.”

The price for a barrel of oil in Q3 alone swung from “as low as $68 [to] as high as $132 a barrel,” Chevron CFO Eimear Bonner said during an Oct. 30 earnings call. Because of market volatility, and despite a “strengthened” balance sheet, “we’re not changing anything in the short term” with capital allocation decisions, Bonner told analysts.

Shipping has also gotten more expensive, and even Big Oil is feeling the sting. Sinead Gorman, CFO of Shell, observed in an Oct. 29 earnings call, “that route between anywhere in the Middle East and China at the moment is 10x what it was from even just 12 months ago as well or in 2025, full stop.” An increase in spot rates—the cost of shipping based on current market conditions as opposed to a previously agreed-upon rate—was “beginning to push down on margins,” Gorman added.

In addition to Middle East disruptions, war between Russia and Ukraine has disrupted global supply. Ukraine’s bombing of Russian refineries has roughly halved the country’s refining capacity and required Russia to import more oil, causing “a material impact on the world balances,” Darren Woods, CEO of ExxonMobil, told investors during an Oct. 30 earnings call. It will take time to rebuild the destroyed refineries and bring up capacity again, he said.

“My view is that [capacity is] going to be a lot longer to come online because two things have to happen: stop the hostilities and then start the repairs,” Woods said, adding that China could also bring online additional capacity and increase its exports.