U.S. Oil Companies Project Strongest Profits Since 2022, Brace for Tension with Trump Over Gas Prices

U.S. oil companies are poised to announce their most significant quarterly profits in years, potentially leading to friction with President Donald Trump. The President has urged the oil industry, a long-time ally, to reduce gasoline prices ahead of the midterm elections in November. Following months of public discontent over rising fuel costs, Exxon Mobil and Chevron are expected to report second-quarter earnings that exceed three times their first-quarter figures.

Rising Oil Prices and Industry Profits

The escalation of oil prices began in late February, coinciding with the onset of the U.S.-Israeli conflict with Iran, which tightened global fuel supplies. Industry forecasts suggest that profits for oil companies will reach their highest levels since 2022. This anticipated financial windfall could complicate the traditionally amicable relationship between Trump and the oil sector, which has been a crucial financial supporter of both Trump and the Republican Party.

The surge in gasoline prices has intensified calls for affordability from Democrats aiming to regain control of Congress. This situation has also contributed to a decline in Trump’s approval ratings, as many Americans question the value of the conflict with Iran. In response, the administration has called on the U.S. Justice Department to investigate potential gasoline price gouging. Treasury Secretary Scott Bessent has warned producers and refiners that the White House may consider administrative actions if fuel prices do not decrease significantly.

Industry Response and Political Dynamics

An anonymous industry executive noted that discussions among oil companies are ongoing regarding how to navigate the political landscape. Since the resumption of shipping through the Strait of Hormuz last month, Trump has expressed a desire for the national average gasoline price to drop to approximately $2.50 per gallon, significantly lower than the current average of around $3.85. This figure is also about 11% below the lowest price during his presidency, which was approximately $2.81 in late December.

Oil industry lobbyists have increased their outreach to government officials and lawmakers to mitigate criticism. Executives in the sector assert that their influence over retail gasoline prices is limited. Crude oil prices contribute nearly half of the total cost consumers pay at the pump, with the remainder determined by refining, distribution, marketing, and taxes. Despite benchmark crude prices returning to pre-war levels, U.S. gasoline prices remain about 22% higher than before the conflict began. Analysts attribute this discrepancy to tight fuel markets and limited gasoline inventories, rather than crude oil prices alone.

Bob McNally, president of Rapidan Energy Group, indicated that this divergence underscores structural supply-demand pressures. Bethany Williams, a spokesperson for the American Petroleum Institute, emphasized that gasoline prices do not always correlate directly with crude oil prices, especially during significant global disruptions affecting supply and refining.

Regulatory Factors and Market Dynamics

The American Fuel & Petrochemical Manufacturers highlighted the role of policymakers in influencing prices, citing regulatory costs as a factor. They noted that refineries do not set the price of finished gasoline, and crude oil is just one of many inputs that contribute to the final cost. For example, the Renewable Fuel Standard mandates that retailers sell a specific percentage of fuel containing ethanol or other biofuels.

The White House has stated that Trump’s primary focus is on lowering gasoline prices, referencing the decline in oil prices since the Iran agreement and increased collaboration with the oil industry on permitting and regulation. Exxon Mobil declined to comment, while Chevron referred to a June 25 interview where CFO Eimear Bonner indicated that it would take time for gasoline prices to stabilize.

Anticipated Earnings and Market Trends

Analysts predict that Big Oil’s second-quarter earnings will be the strongest since 2022, following the upheaval in energy markets due to Russia’s invasion of Ukraine. According to estimates compiled by LSEG, Exxon Mobil is expected to report approximately $15.9 billion in adjusted net income, more than tripling its first-quarter earnings. Chevron is projected to report around $9.9 billion, also more than three times its previous quarter’s earnings. Part of this increase is likely due to a reversal of first-quarter accounting losses related to derivatives used for hedging crude and refined product exposure. However, analysts suggest that the broader gains stem from stronger market fundamentals.

Energy advisory firm TPH estimates that U.S. gasoline crack spreads—the difference between the price of crude oil and the fuels produced from it—averaged about $25 per barrel in the second quarter, an increase of roughly $16 from the previous quarter. Diesel crack spreads also rose by about $15 to approximately $45 per barrel, marking the strongest margins since mid-2022. The robust demand for U.S. exports has further amplified these gains, as international refiners face supply shortages due to the ongoing conflict.

Despite the challenges faced by U.S. drivers at the pump, analysts at BMO Capital Markets expect oil companies to ramp up share buybacks in the latter half of 2026, continuing a post-pandemic emphasis on returns over production growth. One executive remarked on the industry’s perception, stating that while being seen as a “boogeyman” is not enjoyable, it is essential to educate officials about the cyclical nature of the industry and the risks involved.

Source: www.zawya.com

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Published on 2026-07-03 16:36:00 • By the Editorial Desk