Photo: Goose Green Photography, CC BY 4.0, via Wikimedia Commons. File photo of an ExxonMobil refinery, not a photo of Friday's earnings announcements.
ExxonMobil and Chevron both beat Wall Street expectations for the third quarter on Friday, as soaring refining margins turned their fuel-making businesses into profit engines while wars in the Middle East and Ukraine disrupted global energy markets and pushed gasoline and diesel prices higher.
ExxonMobil, the largest US oil producer by market value, reported net income of $15.4 billion, or $3.72 per share, up from $14.5 billion in the second quarter. On an adjusted basis it earned $17.5 billion, or $4.23 per share, beating the average analyst estimate of $4.12. Revenue rose 33 percent to $113.16 billion, also ahead of forecasts.
Chevron reported net income of $9.9 billion, or $5.06 per share, and adjusted earnings of $5.28 per share, comfortably above the $4.89 analysts had expected. Its revenue surged 36 percent to $67.8 billion.
Refining overtakes oil production at Exxon
The standout detail came from Exxon's refineries. Its Energy Products division, which houses its refineries, earned a record $9.05 billion on an adjusted basis — almost five times the year-earlier figure — edging out the $7.31 billion from its upstream oil and gas production business. It was the first time in at least six years that Exxon earned more from refining than from producing oil and gas, according to Reuters.
Chevron's downstream business told the same story. Its refineries earned $4.93 billion, the highest on record and up from $1.14 billion a year earlier. Its US refineries processed a record 1.09 million barrels of crude a day, running at nearly 98 percent of capacity.
Exxon said the quarter was its fourth-highest profit in the company's 156-year history. Chevron also reported its fourth-highest quarterly profit ever.
Why fuel margins exploded
The driver was disruption. The US-Israeli war on Iran and the war between Russia and Ukraine have knocked out fuel-making capacity and roiled energy markets, sending the prices refiners charge for gasoline and diesel sharply higher even as crude prices softened. Brent crude swung between $68 and $132 a barrel during the quarter, Chevron finance chief Eimear Bonner told Reuters.
Exxon said higher refining margins added an estimated $4.5 billion to its quarterly earnings, more than offsetting a $1.3 billion drag from lower oil prices. A key US gauge of refiner profitability, the Gulf Coast 3-2-1 crack spread, climbed 28 percent from the second quarter and peaked at an all-time high of $72.64 on September 22.
Exxon's upstream earnings fell 20 percent to $7.3 billion as crude traded lower than in the previous three months, while its chemicals earnings slipped to $725 million from $1.2 billion on weaker margins.
What the windfall means for drivers — and the election
The results land days before the November 3 US midterm elections, with fuel prices already squeezing household budgets and featuring in campaign debates. Refiners profiting from high pump prices while consumers pay more is a politically sensitive combination, and both companies used the cash to strengthen their balance sheets rather than raise payouts: Exxon cut debt by $8 billion in the quarter and held its share buyback plan at $20 billion for 2027, while Chevron cut net debt to $20.7 billion from $34.5 billion at the end of 2025.
Across the five big Western oil majors — ExxonMobil, Chevron, BP, Shell and TotalEnergies — combined adjusted net income reached $56.3 billion for the quarter, with every company beating expectations, according to Bloomberg's tally.
What to watch next
The question for the fourth quarter is whether refining margins stay elevated. If fighting in the Middle East eases or fuel supplies recover, the crack spreads that powered this quarter could narrow quickly. If disruptions persist, refiners could keep posting outsized profits — and drivers could keep paying high prices into the winter.
Sources: Reuters; The Business Times; company earnings releases.