Oil companies are braced for a toughest year since the coronavirus pandemic as lower crude prices squeezed their 2025 first-quarter (Q1) profits.
Big Oil’s shareholder returns have been a hot-button issue for investors, particularly as industry profits continue to fall from record highs in 2022.
A weak demand outlook, falling crude prices, and United States President Donald Trump’s fast-changing trade policy have rattled investor sentiment in recent months.
Shell
Shell on Friday told shareholders that adjusted earnings dropped by 27.9 percent to $5.58 billion for the Q1 of 2025. The drop in profits also came as the company said it was impacted by a $509 million charge related to the UK energy profits levy.
Wael Sawan, CEO of Shell, described the earnings as ‘another solid set of results.’
“Our strong performance and resilient balance sheet give us the confidence to commence another $3.5 billion of buybacks for the next three months, consistent with the strategic direction we set out at our Capital Markets Day in March,” Sawan said in a statement.
Shell reaffirmed its reduced annual investment budget of $20 billion to $22 billion for 2025.
In March, Shell had announced plans to increase shareholder returns and cut spending, doubling down on its liquified natural gas (LNG) push.
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British Petroleum
Apart from Shell, British Petroleum reported an even steeper decline in its Q1 net profit, plummeting by 70 percent to $687 million.
BusinessDay’s findings showed profit after tax declined to $687 million, down from $2.3 billion in the first three months of 2024, driven by weaker gas sales and lower refining margins.
Total revenue fell four percent to slightly under $48 billion. BP and other oil majors have been hit by a recent slump in crude prices on fears that US President Donald Trump’s tariffs could cause a recession, impacting demand.
“We continue to monitor market volatility and changes and remain focused on moving at pace,” Murray Auchincloss, BP’s chief executive, said in an earnings statement.
Chevron and Exxon profits drop
Chevron and Exxon reported a drop in quarterly profits on Friday on the back of falling oil prices and weak refining margins, as the oil industry braces for its toughest year since the pandemic.
Chevron said net income fell by just over a third to $3.5 billion in Q1, down from $5.5 billion a year earlier, and slightly below analysts’ consensus estimates. Revenues fell to $47.6bn, down from $48.7bn a year earlier, as its global production remained flat.
Meanwhile, Exxon, the largest Western oil producer, said it made a profit of $7.7bn in the three months to the end of March, down from $8.2bn a year earlier. Earnings were $1.76 per share, ahead of analysts’ forecasts.
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Oil prices
The pressure on the industry has intensified in recent weeks as increased supply from Organisation of the Petroleum Exporting Countries (OPEC) and escalating trade tensions under US President Donald Trump have undermined investor sentiment.
Brent crude briefly slipped below $60 a barrel this month, with some analysts predicting that prices in the second half of 2025 will be more than a fifth down on last year’s average of $81.
Shareholders are questioning which of the big companies have the cost discipline and balance sheet strength to maintain the higher dividends and share buy-backs on offer over recent years, say analysts.
“The questions we’ve been getting from investors are around who’s going to cut first,” said Biraj Borkhataria, an analyst at RBC Capital Markets. “Given how uncertain the environment is, investors are looking for some reassurance.”
Analysts at Bank of America say Big Oil’s Q1 results season has been overshadowed by speculation suggesting that OPEC kingpin Saudi Arabia is no longer willing to prop up oil prices.
In a research note published Friday, analysts at the Wall Street bank reiterated their sector strategy view of preferring the likes of Shell, France’s TotalEnergies and Norway’s Equinor among Europe’s energy majors.
“Stronger balance sheets … will allow them to withstand the pressure on cash flows from lower oil prices without exposing shareholders to as much dilution – whether from procyclical disposals, organic cuts into their resource base and growth outlook or indeed shareholder distributions,” analysts at Bank of America said.
