Oil prices have fluctuated over the past few weeks following a series of geopolitical developments, including a fragile ceasefire in Gaza and new U.S. sanctions on Russian energy.
However, by the end of October, the oil market was much as it had begun the month, with prices hovering around $60 a barrel and companies bracing for the possibility that they could slide further.
There is a significant amount of oil sloshing around the world, and demand has not kept pace. Uncertainty about the future of global trade and the health of the U.S. economy is further muddying the outlook.
Rather than cutting production, America’s largest oil companies are pumping away. Exxon Mobil’s output climbed about 4 percent in the third quarter, compared with a year earlier. Chevron produced around 7 percent more, excluding contributions from Hess, which it acquired this summer.
“Our cash flows from our assets are very resilient even in lower prices,” Eimear Bonner, chief financial officer at Chevron, said in an interview. Cycles, she added, “don’t typically last for long periods of time.”
Exxon and Chevron are in good company, with the oil cartel known as OPEC Plus also ramping up. Saudi Arabia and other members of OPEC+ are set to meet on Sunday to consider increasing oil production in the market.
All told, global supplies will increase around 2.1 percent this year, even as demand expands a mere 0.9 percent, according to UBS estimates.
The industry’s persistence in the face of lower prices reflects the fact that drilling remains profitable for many companies. Many executives believe demand will catch up relatively quickly, perhaps as soon as next year.
“We’re not talking years — we’re talking months,” Olivier Le Peuch, chief executive of the oil field service giant SLB, said on a recent earnings call.
In the meantime, Exxon’s third-quarter profit fell 12 percent, to $7.5 billion. Revenue shrank 5 percent, to $85.3 billion, as oil prices were about $10 a barrel lower than during the same period in 2024. Much higher natural gas prices in the recent quarter helped to offset that.
Chevron’s profit fell 21 percent, to $3.5 billion, as revenue slipped almost 2 percent, to $49.7 billion.
“In the short to medium term, there are headwinds,” Wael Sawan, chief executive of Shell, said on Thursday, after the British company reported financial results. “Longer term, we continue to have strong conviction in crude prices.”
Shell’s profit in the third quarter climbed 24 percent, to $5.3 billion, buoyed by its trading business, but was lower than in 2024 after adjusting for one-time items.
Exxon’s stock price fell less than 1 percent Friday morning, while Chevron’s climbed 3 percent. The industry has underperformed the stock market by a wide margin this year, with an exchange-traded fund composed of U.S. oil and gas companies down 5 percent even as the S&P 500 index gained 16 percent.
Not only have oil prices fallen, but President Trump’s tariffs are also driving up the costs of materials like steel pipe, which are needed to drill new wells.
The combination of lower oil prices and higher costs has been particularly formidable for smaller oil and gas producers, which have pulled drilling rigs out of the field and postponed fracking, the process of blasting fissures in rock formations to release oil and gas trapped there.
The number of hydraulic fracturing crews working in the Permian Basin, the top U.S. oil field, has fallen around 25 percent this year, according to the service company ProPetro Holding.
Like many of their competitors, Exxon and Chevron are laying off workers to try to maintain profit margins.
Darren Woods, chief executive of Exxon, told analysts that the company continued to pursue opportunities to provide power for data centers, but only to the extent that customers paid Exxon to capture most of the associated carbon dioxide emissions.
Exxon said almost a year ago that it was looking to get into that business, but it had yet to disclose any agreements. Google said last week that it had reached a deal with a company, Low Carbon Infrastructure, that is developing a project in Illinois that is along the lines of what Exxon proposed.
“I’m hopeful that many of these hyperscalers are sincere when they talk about the desire to decarbonize,” Mr. Woods said, using an industry term for tech giants like Amazon, Google, and Microsoft. “We’ll see what gets translated into actual contracts and then into construction.”
