Profits of American Oil Giants Exxon and Chevron Sharply Declined

Due to a decline in oil prices of more than 50 percent over the past year, American oil giants Exxon and Chevron recorded a sharp drop in profits in the third quarter.

Exxon Mobil’s profit, the world’s largest oil company by market value, fell by 47 percent in the third quarter to $4.24 billion, while earnings in the same period last year amounted to $8.07 billion.

This is a consequence of the drop in oil prices in global markets by more than 50 percent due to oversupply relative to weak demand, which is under pressure from slowing global economic growth, primarily in China, the world’s largest consumer of raw materials.

According to the business report published on Friday, Exxon’s earnings from oil exploration and production fell from last year’s $5.1 billion to $1.4 billion.

On the other hand, the company’s profit from oil refining nearly doubled compared to the same period last year, reaching $2 billion. Due to the sharp decline in the price of ‘black gold’, refineries can now process significantly cheaper oil and achieve higher profits on fuels.

Despite the drop in earnings, Exxon stated in its business report that it will not reduce investments this year nor does it see a need for restructuring.

Conversely, the second-largest American oil producer, Chevron, announced a reduction in investments and the elimination of about 10 percent of jobs.

Chevron reported on Friday that it recorded a profit of $2.04 billion in the past quarter, while it achieved earnings of $5.59 billion in the same period last year.

As a result, the company’s management announced a 25 percent reduction in the budget for projects next year, to $25 to $28 billion.

The company estimates that it will also reduce costs in 2017 and 2018, and it announced the elimination of between 6,000 and 7,000 jobs.

Despite the sharp drop in profits, the results of both Exxon and Chevron were better than analysts expected in a Reuters survey, leading to an increase in the stock prices of these oil giants on Wall Street on Friday.