Key points
- Higher refining margins could lift downstream profit by $4.5 billion from the second quarter.
- BMO’s Phillip Jungwirth says refining adjusted income could reach $8.5 billion.
- Upstream earnings could fall $1.3 billion as Brent dropped about 5.6%.
ExxonMobil signaled on Friday that higher refining margins in the third quarter could lift its downstream profit by $4.5 billion compared with the previous three months.
Margins have soared because of the ongoing Iran war, which has restricted energy exports through the Strait of Hormuz, and Ukrainian attacks on Russian refineries.
Higher fuel prices have created political risks for President Donald Trump’s administration ahead of the November midterm elections.
A windfall that could draw criticism
The expected boom could further irritate Trump, who complained in August that Exxon and Chevron were making “too much money.”
Exxon’s regulatory filing indicates adjusted net income for refining could jump to $8.5 billion, wrote BMO Capital Markets analyst Phillip Jungwirth. That would be more than double last quarter’s level.
Upstream and other details
Upstream earnings could take a $1.3 billion hit versus the second quarter. The average closing Brent price fell about 5.6% over the period, according to LSEG data.
Exxon said the Iran war caused no volume-related disruptions. In addition, its divestment of some upstream assets will add $700 million to earnings.
The company will release full third-quarter results on Oct. 30, and its shares rose less than 1% in pre-market trading.
