Iran war boosts oil majors' profits and puts spending plans to the test

Major oil companies are poised for a surge in third-quarter profits, benefiting from higher energy prices and disrupted navigation in the Strait of Hormuz due to the war on Iran. Shell, BP, and TotalEnergies expect refining margins to rise 3-4 times, with attention focused on spending plans and share buybacks.

Major oil companies are poised for a significant jump in third-quarter profits, benefiting from higher energy prices and disrupted navigation in the Strait of Hormuz due to the US-Israeli war on Iran. Shell, BP, and TotalEnergies expect refining margins to rise between three and four times compared to last year. Shell anticipates its cash flow reaching a record $42 per barrel, while TotalEnergies expects cash flow from its refining and chemicals businesses to rise to about $4 billion compared to the previous quarter. Exxon indicated that higher refining margins could boost refining and marketing segment profits by $4.5 billion compared to the previous quarter. Investors are focused on how wisely these companies will use the large cash liquidity and whether they will resist excessive expansion in spending.