Major oil companies are expected to report a sharp rise in third-quarter profit, driven by stronger refining and trading results linked to the US-Israeli war on Iran. Investors will be watching how the firms use their large cash reserves and whether they hold back from a fresh wave of spending.
The war began with US-Israeli airstrikes in February and has severely disrupted the Strait of Hormuz. That disruption has pushed energy prices to multi-year highs, giving trading desks room to profit from the volatility.
Refining margins and cost discipline in focus
Shell, BP and TotalEnergies all expect refining margins to rise three to fourfold in the third quarter compared with a year earlier. Shell is guiding for a record of $42 a barrel, while TotalEnergies expects cash flow from its refining and chemicals business to roughly double from the previous quarter, to around $4 billion.
Exxon has signalled that higher refining margins could lift its downstream profit by $4.5 billion compared with the prior quarter. The majors have all pledged not to lose control of costs, a notable promise in a sector long known for boom and bust.
Investors weigh spending plans and debt repayment
RBC Capital Markets analyst Biraj Borkhataria wrote in a research note that investors want to know whether the companies will stick to their existing spending plans despite exceptional earnings. So far, Chevron and Exxon have used the extra money to pay down debt.
Chevron investors will monitor its investment in Venezuela and its progress toward extending its contract to run the TCO joint venture in Kazakhstan, which is developing the country’s largest oilfield, analysts said. HSBC expects Shell to announce a $3.5 billion buyback for the fourth quarter, after it reduced its quarterly buyback pace to $3 billion earlier this year.
BP’s debt reduction and capital allocation outlook
After the trading update last week, investment bank TPH named BP its favourite among European majors. It said BP’s underlying profit could exceed $7 billion, up from $5.7 billion in the second quarter, helped by refining and gas marketing and trading.
Citi data show BP’s ratio of net debt to operating cash flow falling from 1.7 times at the end of 2025, the highest of the five biggest majors, to an expected 0.8 times by the third quarter. HSBC said BP is likely to discuss its future capital allocation at its third-quarter earnings, as it reaches a target to cut net debt about a year early, helped by pausing its buyback this year. BP has flagged a strategy update for December 15.
“We believe the priority will remain firmly on deleveraging, with stable capex and no buyback resumption before 2028,” said HSBC’s Kim Fustier and Sadnan Ali in a note.
Shell and TotalEnergies are due to report on October 29, while BP, Chevron and Exxon are scheduled for October 30.
