ExxonMobil said higher third-quarter refining margins could lift its downstream profit by $4.5 billion from the previous three months. Margins have jumped because of the Iran war and Ukrainian attacks on Russian refineries, while upstream earnings could fall by $1.3 billion.
ExxonMobil signaled on Friday that higher third-quarter refining margins could boost its downstream profit by $4.5 billion compared with the previous three months. The company will release full results on October 30.
Refining margins have soared because of the ongoing Iran war, which has restricted energy exports through the Strait of Hormuz, and because of Ukrainian attacks on Russian refineries, Reuters reported. The resulting higher fuel prices have created political risks for President Donald Trump's administration ahead of the November midterm elections.
Refining profit could more than double
BMO Capital Markets analyst Phillip Jungwirth wrote in a research note that Exxon's regulatory filing indicates adjusted net income for the refining business could jump to $8.5 billion. That would be more than double last quarter's profit level.
The expected refining boom could further draw the ire of Trump, who complained in August that Exxon and Chevron were making "too much money", according to Reuters.
Upstream earnings take a hit
However, the upstream business moves the other way. Exxon's earnings preview indicates upstream earnings could take a $1.3 billion hit compared with the second quarter. The average closing Brent benchmark price declined about 5.6% during the third quarter compared with the previous three months, according to LSEG data cited by Reuters.
Exxon also indicated that there were no volume-related disruptions during the quarter stemming from the Iran war. Separately, the company's move to divest some upstream assets will boost earnings by $700 million.
Exxon shares were up less than 1% in pre-market trading.
Source: Commodities & Futures News
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