The global oil market has seen a rollercoaster ride recently, with prices fluctuating significantly. Over the past few weeks, a series of geopolitical events—including a fragile cease-fire in Gaza and new U.S. sanctions targeting Russian energy—have caused oil prices to fall, then climb, only to fall back down.
By the end of October, the market found itself largely where it began the month: with crude oil hovering around $60 a barrel. Companies are now bracing for the real possibility of further price drops.
The core issue is a worldwide glut of oil, with supply far outstripping demand. Adding to this complex situation are uncertainties surrounding global trade and the overall health of the U.S. economy, further clouding the market’s future.
Interestingly, instead of scaling back, America’s leading oil companies are intensifying their output. Exxon Mobil, for instance, saw its production increase by approximately 4 percent in the third quarter compared to the previous year. Chevron also boosted its output by roughly 7 percent, even before factoring in contributions from Hess, a company it acquired this past summer.
Eimear Bonner, Chevron’s chief financial officer, highlighted the resilience of their operations, stating, “Our cash flows from our assets are very resilient even in lower prices.” She added optimistically that market cycles “don’t typically last for long periods of time.”
Exxon and Chevron aren’t alone in this strategy; the influential oil cartel known as OPEC Plus is also stepping up its production. A crucial meeting for Saudi Arabia and other OPEC Plus members is scheduled for Sunday, where they will discuss potentially adding even more oil to the market. According to estimates from UBS, global supplies are projected to rise by about 2.1 percent this year, while demand is only expected to grow by a modest 0.9 percent.
The industry’s unwavering commitment to production, even amidst falling prices, stems from the simple fact that drilling largely remains profitable for many companies. Furthermore, numerous executives are confident that demand will rebound relatively quickly, possibly as early as next year.
“We’re not talking years, we’re talking months,” remarked Olivier Le Peuch, CEO of the oilfield service powerhouse SLB, in a recent statement.
Despite these efforts, Exxon’s third-quarter profit experienced a 12 percent drop, settling at $7.5 billion. Its revenue also dipped by 5 percent, reaching $85.3 billion. This decline was primarily driven by oil prices being about $10 a barrel lower than they were in the third quarter of 2024, although higher natural gas prices this quarter provided some cushioning.
Chevron mirrored this trend, reporting a 21 percent fall in profit to $3.5 billion, while its revenue slid by nearly 2 percent to $49.7 billion.
“In the short to medium term, there are headwinds. Longer term, we continue to have strong conviction in crude prices,” commented Wael Sawan, CEO of Shell, following the British company’s financial results announcement on Thursday. Shell’s third-quarter profit increased by 24 percent to $5.3 billion, largely boosted by its trading division, though it was lower than 2024’s figures when one-time adjustments were made.
In premarket trading, Exxon’s stock price fell over 1 percent, while Chevron’s saw a slight increase. This year, the oil industry as a whole has significantly lagged behind the broader stock market; an exchange-traded fund comprising U.S. oil and gas companies is down 5 percent, in stark contrast to the S&P 500 index’s 16 percent gain.
To cope with the current market pressures, both Exxon and Chevron, much like their competitors, are seeking to protect their profit margins by reducing their workforce.
Compounding the challenge of lower oil prices are President Trump’s tariffs, which have pushed up the cost of essential drilling materials such as steel pipe for new wells.
This combination of decreased oil prices and escalating costs has hit smaller oil and gas producers particularly hard. Many have consequently reduced the number of drilling rigs in operation and delayed fracking—the critical process of creating fractures in rock to extract trapped oil and gas.
According to ProPetro Holding, a service company, the number of hydraulic fracturing crews active in the Permian Basin, America’s leading oil field, has dropped by approximately 25 percent this year.