The two largest petroleum companies in the US released their second-quarter (Q2) figures last week. As with their counterparts in the UK, the commercial operations of both ExxonMobil (US:XOM) and Chevron (US:CVX) appear to have fared rather well despite severe shipping disruptions in the Strait of Hormuz.
The price of Brent crude – the global benchmark – was trading above $100 a barrel for much of the period, and has averaged just over $87 for the year as a whole. A greater problem for both consumers and industry has been the rapid rise in diesel costs. Considering its impact on farm costs and logistics, it’s nailed on that we’ll see more inflation leeching into the economy, not least because demand for the fuel is inelastic.
Any rise in underlying prices is inherently favourable for resource companies, whatever their stripe. But given present circumstances, it probably helps if your productive assets are located outside the Gulf.
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Shell (SHEL) delivered adjusted earnings and free cash flow well ahead of expectations for Q2, but its production rate suffered due to a lengthy closure of LNG operations in Qatar. Saudi Aramco (SA:2222) also had to contend with falling volumes due to blocked shipping lanes and infrastructure attacks.
Happily for Chevron, nearly all of its production is derived outside the Middle East, while ExxonMobil has about a fifth of its output tied to the Gulf states – a potential vulnerability but not a terminal one.
The International Energy Agency estimates that about 3mn barrels a day of refining capacity in the region have been lost. So even though more physical crude has been making its way on to global markets, supplies of finished products remain tight, hence the concerns over diesel supplies. It doesn’t help that Russian throughputs have been constrained due to Ukrainian drone attacks, and Asia is still running at reduced rates.
Little wonder then that the US drillers have benefited from a steep rise in refining margins. For Exxon, this amounted to $29 a barrel during Q2, set against $18.30 for the final quarter of 2025. Throughput amounted to 1.85mn barrels per day (bpd), against 1.88mn bpd during the first half of 2025.
Chevron achieved record crude throughput at US refineries (1.07mn bpd) at an outstanding utilisation rate of 97 per cent. US downstream Q2 earnings amounted to $2.41bn compared with just $404mn in 2025, and the differential was even more pronounced in its international markets. In all, Chevron delivered a sixfold increase in its refining profit on the prior year.
With margins on the fly, the market had priced in some heady assumptions on linked earnings, so even though Exxon delivered a 67 per cent increase in profits from the first quarter to $14.7bn, and hit record production in the US Permian Basin, its adjusted earnings of $3.52 a share came up short of consensus. An earnings miss, however minuscule, is rare for Exxon, but it placated shareholders with a $1.03 dividend per share, which implies an annual yield of 2.6 per cent.
Meanwhile, Chevron generated its highest ever quarterly net income of $12.1bn, while operating cash flow hit $22.6bn against $8.6bn a year earlier. The group took a prudent line on the cash surge, paying down a record $8.4bn in debt before funding another $1.78bn quarterly distribution.
Geography and the sheer scale of their supporting infrastructure have helped the US majors to successfully navigate a period of severe disruption in global energy markets. But it’s worth noting that, unlike Shell, BP (BP.), or even France’s TotalEnergies (FR:TTE), neither of the US groups has recourse to major trading operations, although they are steadily developing their trading activities in the liquefied natural gas market.
Both Exxon and Chevron are slightly different beasts to their European counterparts in that they operate more centralised business structures – not an ideal scenario on the trading front. More to the point, paper derivatives simply aren’t for everybody, and you’re willingly pitting your wits against the likes of Vitol and Trafigura, wise old stagers in the market. But given the potential support that trading activities can offer when energy prices aren’t running in your favour, you wonder if they could be missing a trick.
Yet it’s clear that their apparent aversion to futures contracts and contracts for difference (CFDs) hasn’t put a dent in their respective ratings. The US majors both have forward price/earnings multiples in the mid-teens, whereas Shell and BP remain in single digits. Perhaps this reflects investor scepticism over the latter companies’ dalliance with renewables, but among other things, it means the US pair can rely on a lower cost of capital – a major benefit where resources companies are concerned.