Oil giants report blowout profits on war, warn high gas prices could persist

NEW YORK, United States (AFP) -- US petroleum giants ExxonMobil and Chevron released blowout profits Friday due to the Middle East war, as executives cautioned that elevated gasoline prices will probably continue to strain consumers. The US oil giants scored huge profit increases, illustrating that the financial benefits from supply disruptions from the US-Iran war easily offset negative effects at both companies. ExxonMobil's second-quarter profits more than doubled to $14.5 billion, while Chevron's came in at $12.1 billion, more than five times the level in the year-ago quarter.

But gasoline prices sit above the psychologically important $4 per gallon level, posing political risk to US President Donald Trump ahead of the US midterm elections. While crude prices are relatively high, executives with the two oil giants emphasised the effects of diminished refinery capacity in the wake of Iran's virtual shutdown of the Strait of Hormuz that has led some plants to shut or reduce runs. "I wouldn't hold my breath here in the short term," ExxonMobil Chief Executive Darren Woods told CNBC in response to a question about when gasoline prices will fall.

"I think we're going to see prices consistent with what we're experiencing for quite a while yet," said Woods, describing a "disconnect" between crude and gasoline markets distinct from long-term trends. "We've got to get the Strait opened up and then we've got to resupply the inventories and get things moving," Woods said. Chevron Chief Executive Mike Wirth described the meager state of motor gasoline inventories as part of broader dearth of refined products supplies that also affects jet fuel and diesel, among other goods.

"We're going to see upward pressure on product pricing here into the third quarter and perhaps beyond that," Wirth told analysts on a conference call. - Windfall profits tax - With revenues of $116 billion, up 42 per cent, ExxonMobil pointed to higher oil prices as a factor in its earnings, while emphasising huge increases in refining margins. Refining margins, the profit from gasoline and other products minus crude oil costs, "reached record levels in the quarter," ExxonMobil said in prepared remarks that cited a nearly nine per cent drop in global capacity because of war-related dislocations.

Besides lost volumes due to the Strait of Hormuz, Woods cited a drop in China fuel exports and lost Rus…