Major U.S. oil companies, Exxon Mobil and Chevron, have recorded their lowest first-quarter profits in years as they navigate the impacts of the ongoing trade war initiated by President Trump. With crude oil prices dropping below sustainable production thresholds and rising costs due to tariffs, the industry braces for possible adjustments in spending and operations.
U.S. Oil Giants Face Lower Profits as Trade Tensions Rise
U.S. Oil Giants Face Lower Profits as Trade Tensions Rise
Exxon and Chevron report significant drops in profits due to President Trump's tariffs and declining oil prices, adapting their strategies amidst economic uncertainty.
The two largest U.S. oil companies, Exxon Mobil and Chevron, revealed troubling financial results on Friday, reporting their lowest first-quarter profits in years as the implications of President Trump's escalating trade war begin to weigh heavily on the sector.
As consumer confidence falters and oil prices plunge, U.S. crude dipped below the critical mark of $60 a barrel this week, a drop that spells trouble for companies reliant on drilling new wells. This current price represents a stark $20 reduction compared to oil prices shortly before Trump's administration took power. The financial squeeze is compounded by the rising costs of raw materials, including steel, driven up by new tariffs imposed by the Trump administration.
In response to these financial pressures, industry activity is beginning to slow. Reports from Baker Hughes, a notable oil field service firm, indicated a 3 percent reduction in drilling rigs operating in the Permian Basin within the last month. According to their executives, clients are holding back on optional expenditures, which suggests potential declines in overall sector spending as 2025 progresses.
Chevron, which ranks as the second-largest oil entity in the U.S., has previously indicated intentions to curb expenditures this year, and has yet to modify its forecast for annual production or capital expenses. "We're comfortable with where we are right now," said Eimear Bonner, Chevron's chief financial officer. "We’ve navigated cycles before. We know what to do."
The financial outcomes of Exxon and Chevron reported this week mirror the market conditions that existed prior to the announcement of additional tariffs by Trump. Compounding the market's challenges, OPEC Plus recently surprised analysts by accelerating its own plans to increase oil production, adding further uncertainty to the financial landscape for U.S. oil companies.
