PROFITS SLUMP FOR EXXON MOBIL AND CHEVRON AS US TARIFFS LOOM
Exxon Posts 67% Plunge in Refining Profits, Chevron Discloses 72% Decline
Exxon Mobil and Chevron, two of the biggest North American oil companies, have seen their refining profits slump as the prospect of US tariffs on two major oil suppliers threatens to make the refining business even worse. Exxon posted a 67% plunge in 2024 refining profits, while Chevron disclosed an even larger decline of 72%.
Tariffs on Canada and Mexico
The tariffs, which could take effect as soon as the weekend, would increase the cost of making everything from gasoline and diesel to jet fuel. US President Donald Trump has vowed to follow through on long-promised 25% tariffs on Canadian and Mexican products, though he declined to say whether oil would be included in the list.
Impact on Refineries
Refineries in the US Midwest depend on Canadian oil for as much as three-fourths of their crude inputs. Meanwhile, Mexican supplies have long been a staple of Gulf Coast fuel-making plants designed to maximize output from so-called heavy crude. As the cost of buying oil from those two nations rises, it could create a knock-on effect for other types of crude as refiners clamour to secure replacement barrels with similar characteristics.
Chevron’s Refining Segment
Chevron’s domestic refineries tend to hug coastal areas, which means they have easier access to crude cargoes from overseas compared with inland competitors, said CEO Mike Wirth. However, Wirth noted that the company’s refining segment lost almost $350 million in the fourth quarter, a stark contrast to expectations.
Exxon’s Refining Earnings
Exxon’s full-year refining earnings dropped to $4 billion from $12.1 billion in 2023. Chevron’s global fleet of plants earned just $1.7 billion last year, down from $6.1 billion.
Industry Impact
The tariffs could curtail shipments of roughly four million barrels a day of oil from the north and 500,000 barrels a day from the south. The nations are the top two sources of foreign crude for US refiners. Valero Energy, the third-largest independent US refiner by market value, warned that the industry may cut fuel production if Trump carries out his tariff threat.
Conclusion
The prospect of US tariffs on Canada and Mexico threatens to make the refining business even worse for Exxon Mobil and Chevron. As the cost of buying oil from those two nations rises, it could create a knock-on effect for other types of crude as refiners clamour to secure replacement barrels with similar characteristics.
Frequently Asked Questions
Q: What is the impact of the tariffs on Exxon Mobil and Chevron?
A: The tariffs could increase the cost of making everything from gasoline and diesel to jet fuel, making it harder for the companies to maintain their refining profits.
Q: How will the tariffs affect Exxon Mobil and Chevron’s refining profits?
A: Exxon posted a 67% plunge in 2024 refining profits, while Chevron disclosed an even larger decline of 72%.
Q: What are the implications for the refining industry?
A: The tariffs could curtail shipments of roughly four million barrels a day of oil from the north and 500,000 barrels a day from the south, potentially leading to fuel production cuts.
