Consumers are paying about $1.20 more per gallon for gasoline than a year ago, according to AAA, while diesel hit a record high in September and ExxonMobil and Chevron shares successively reached record highs.
The war in Iran has disrupted global oil supply and reduced the volume moving through the Middle East, while Ukrainian strikes on Russian refineries have taken a large amount of global refining capacity offline, ExxonMobil said. The company estimated that roughly half of Russia's refining capacity has been taken offline, and that the inability to move clean products from the Middle East to world markets accounts for roughly one-third of the current global product shortage.
ExxonMobil Chairman and Chief Executive Officer Darren Woods told an earnings call that disrupted trade flows and supplies of crude oil, diesel, gasoline and other products had tightened markets and pushed up prices. “We recognize the impact high prices have on people's lives and economic growth,” he said.
The company said it ran its fuels manufacturing facilities, excluding Middle East impacts, at their highest utilisation level on record. Its refineries processed about 3.6 million barrels of crude a day, while global sales of gasoline, diesel and other finished products were roughly 5.7 million barrels a day.
Those operations fed into a sharp rise in refining returns. The refining margin averaged about $71 per barrel in September, nearly 60% above its level three months earlier.
ExxonMobil earned $15.4 billion this quarter, more than double its earnings at the same point last year. It said refining-segment profit rose by $4.5 billion in the third quarter from the previous quarter.
Neil Hansen, ExxonMobil's chief financial officer, said a 3.5% increase in diesel yield represented roughly $1.5 billion in quarterly margins this year, or $3.5 billion year to date.
The gains have spread through the sector. Three oil companies together made just over $36 billion this quarter, while net profit at S&P 500 energy companies rose 127.6% from the same period last year, according to FactSet.
ExxonMobil stock also moved above the average target price set by 25 Wall Street analysts. The State Street Energy Select Sector SPDR, known as XLE, climbed roughly 55% this year to an all-time high.
Chevron Chief Executive Mike Wirth told investors that the company would focus on what it could control. “What we can do is what we can control, and that's help consumers get as much as they possibly can out of our systems,” he said.
At Shell, Chief Executive Wael Sawan described the surprise of the oil-price rise. “If you'd asked me six months ago, would I have thought that oil prices were going to be where they are today — no,” he said. Shell announced one of its biggest-ever buybacks.
Brent crude was trading around $113 a barrel, up from about $70 a barrel before the war in Iran began. The US Strategic Petroleum Reserve is at low levels, while Europe has released some crude oil and diesel.
ExxonMobil returned $9.4 billion to shareholders through dividends and share repurchases during the quarter. It also announced a 4% increase in its dividend per share, its 44th consecutive year of annual dividend-per-share growth.
Democrats in both chambers of Congress have called for a tax on windfall profits. Bills introduced this spring would return windfall profits to Americans through tax rebates.
Woods called windfall taxes a “misguided policy.” He said refining markets may take “well through next year” to move closer to normal.
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