The two largest American oil companies reported their lowest profits of the first quarter in years on Friday, since they prepared for the economic consequences of President Trump’s commercial war, which has weakened consumer’s confidence and promoted oil prices.
American crude oil prices fell less than $ 60 per barrel this week, a threshold below which many companies cannot earn money drilling new wells. Crude oil now costs around $ 20 per barrel cheaper than it was just before Trump assumed the position. Petroleum is not only getting less, companies are paying more for steel and other materials due to the rates imposed by the president.
There are signs that some companies are already going back.
From last week, the number of well drilling platforms in the Permian Basin, the largest American oil field, had fallen 3 percent in a month, according to Baker Hughes, a supplier of oil field services. The clients of that company have been postponing discretionary expenses, and it is likely that the expense throughout the industry falls this year, Baker Hughes executives said last week.
“We are seeing significant downward pressure on prices and margins. In this environment, it is more important than ever focusing on what we can control,” Darren Woods, executive director of Exxon Mobil, said on Friday to analysts.
The financial results reported by Exxon, the largest oil and gas company in the US, and Chevron reflects the market before Trump announced its last round of tariffs. Almost at the same time, the oil sign known as OPEC Plus surprised the market saying that its members would accelerate the plans to pump more oil.
Exxon’s profit reported $ 7.7 billion in the first three months of the year, less than 6 percent compared to the previous year.
The profits of the first quarter of Chevron fell more than a third, to $ 3.5 billion, since the company won less for each barrel of oil it produced. The lowest margins in the refining also harm the profits.
Chevron, the second largest American oil company, said months ago would spend less in 2025, and that it did not change its annual production or capital expenditure forecasts since then. But the company said it would exceed its expense in shares of shares in the second quarter, compared to the first three months of the year.
“We feel comfortable with the place where we are now,” said Eimar Bonner, financial director of the company, in an interview. “We have sailed cycles before. We know what to do.”
The price of Chevron’s shares increased around 2 percent on Friday afternoon, approximately in line with the broader market, which won in a report that showed that the US economy added more jobs in April than analysts expected. The price of Exxon shares changed little.
The question for many energy companies is how long oil prices will remain around $ 60 per barrel or less. If they are reduced to $ 50, national production could fall approximately 8 percent in one year, according to S&P Global Commodity Insights. The United States is the largest oil producer in the world.
Companies are reducing the costs where they can, while waiting for greater clarity on the commercial policy of the United States, said Joseph Esteves, executive director of Maine Pointe, a consulting firm that specializes in operations and problems of the supply chain.
“It is not reaching the point that there is no rock without moving, no unexplored sofa cushion,” said Mr. Esteves.
Mr. Woods said that the lower basic products prices could make other companies attractive acquisition objectives for Exxon, which last year bought Pioneer natural resources for around $ 60 billion.
“We want to make sure to take advantage of any of the opportunities we see,” he said.
Mrs. Bonner said Chevron was experiencing a “limited direct impact” of tariffs. The company has been working to mitigate the effects buying supplies such as steel locally, he said. Chevron estimated that the cost of wells in the United States would change by 1 percent due to rates.
Chevron faces a deadline at the end of May to reduce the activity in Venezuela after Trump took measures to reverse a Biden era policy that allowed to produce more oil in the country. The new rules are already having an effect. The company has not been able to load oil in the ships that will be exported to the United States from Venezuela due to changes in its license, executives said.
“The barrels are flowing, they simply do not flow to the United States today,” Mike Wirth, Chevron executive director, told analysts.
