Big Oil's spending caution speaks louder than its profits: Bousso

What happened

BP, Chevron, Exxon Mobil, Shell and TotalEnergies reported combined third-quarter net profits of $56 billion, helped by higher oil and gas prices, strong refining margins and trading results. BP posted its highest-ever quarterly profit of $8.5 billion, but the companies have avoided major new spending.

Confirmed

Global impact / market context

The gap between strong profits and weak spending signals that oil companies doubt today's high prices will last. If they keep holding back on new projects, future oil and gas supply may grow more slowly, which can support prices but limit growth in equipment, services and jobs.

Analyst inference

Energy prices are unusually high: Brent crude is around $114 a barrel and European gas is at its highest since late 2022. Normally such prices prompt heavy spending. Investors reading the sector should note that strong earnings are not being converted into growth investment, which changes the outlook for future output.

Analyst inference

What to watch

1. Watch whether BP, Chevron, Exxon Mobil, Shell and TotalEnergies announce major new spending plans, since they have so far avoided large new commitments despite near-record profits. Confirmed
2. Track company statements on long-term demand and project approvals; if executives keep describing high prices as temporary, spending is likely to stay restrained. Proposed
3. Watch oil, gas and diesel prices for signs of persistence, because sustained high prices without new spending could tighten future supply and lift costs for fuel users. Analyst inference

Evidence

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