The oil crisis fuelled by Russia’s war is evaporating – and so are the profits
The oil crisis fuelled by Russia’s war is evaporating – and so are the profits
Share:
Results from Shell and Exxon this week will be weaker – and Trump’s desire to drill may result in oversupply. Almost three years ago, Russia’s invasion of Ukraine wiped out Europe’s largest source of gas and shocked global energy markets, setting the stage for quarter after quarter of better-than-expected earnings for the fossil fuel producers ready to profit from the volatility. Now those returns are beginning to cool.
But as markets have reduced to a simmer, oil executives have warned that profits are also going off the boil. A glut of new oil and gas projects, stoked by a pro-fossil-fuel agenda from the White House, could mean weaker markets in the future too. Europe’s largest oil company, Shell, is widely expected to deliver weaker profits this week when it unveils its full-year financial results. The world’s largest trader of liquefied natural gas (LNG) warned shareholders earlier this month that its oil and gas trading results for the final quarter of last year were likely to be significantly lower than in the previous three months.
Shell’s adjusted annual profits are likely to fall to just over $24bn (£19bn) for last year, according to the consensus view of City analysts. This represents a drop from 2023, when its full-year earnings tumbled to $28.25bn from a record high of almost $40bn the year before, when Russia’s war began.
The largest US oil company, ExxonMobil, is expected to report weaker profits in its annual results this week. The oil supermajor, which reported a record $56bn profit in 2022, told investors this month to expect sharply lower oil refining profits and weakness across all its businesses.
