Sept. 28 (Reuters) The world’s biggest energy companies are poised to deliver another quarter of bumper profits, fuelled by record refining margins. Flush with cash, Big Oil now needs to chart a course for future growth in a world reshaped by the Middle East crisis.
Big Oil has seen its cash coffers balloon this year. The five largest Western oil companies — BP, Chevron, Exxon Mobil, Shell and TotalEnergies – are expected to report combined third-quarter profits of around $53 billion, according to RBC Capital Markets estimates, up from $48 billion in the second quarter and more than double year-earlier levels.
Yet since the start of the Iran war in late February, oil majors have largely reacted cautiously to this windfall, directing billions toward debt reduction rather than major new investments. Combined debt is set to drop to $150 billion in the third quarter from $200 billion in the first quarter, according to LSEG estimates.
That approach made sense in the early months of the conflict, when energy markets were swinging wildly on every headline and investors largely accepted US President Donald Trump’s prediction that the war would be short-lived.
Seven months later, the industry finds itself facing a very different reality.
What began as a confrontation between the US, Israel and Iran has evolved into a protracted, low-intensity regional conflict characterized by attacks on energy infrastructure, refineries and shipping lanes. Many of the consequences for global energy markets – including a higher geopolitical risk premium, altered supply lines and greater energy nationalism – are likely to linger long after the fighting ends.
That changes the calculus for an industry that makes multibillion-dollar investment decisions with time horizons measured in decades.
Read full article: https://www.oedigital.com/news/543284-big-oil-faces-strategy-rethink-as-iran-war-reshapes-energy-markets
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