Europe's Top Three Energy Companies See Big Profit Increases in Q1

Profits at U.S. energy companies ExxonMobil and Chevron, however, have dropped significantly. According to the Q1 financial reports recently released by these companies, Shell Group’s adjusted net profit for Q1 was $6.9 billion, an increase of about 24% year-on-year; BP’s underlying replacement cost profit was about $3.2 billion, a year-on-year growth of approximately 132%; TotalEnergies reported a net profit of $5.8 billion, up 51% year-on-year. According to a Shell Group announcement cited by Agence France-Presse on the 10th, the company’s Q1 performance growth benefited from higher energy prices, improved refining profit margins, and increased revenue contributions from its trading business. At the end of February this year, the U.S. and Israel went to war with Iran, which led to the closure of the strategically vital Strait of Hormuz; this sharply reduced global crude oil supply and sent prices soaring. Brent crude oil, the international benchmark, hovered at an average of about $100 per barrel in March, peaking at $120 per barrel; before the outbreak of the Iran conflict, prices were around $70 per barrel. However, profits at U.S. energy companies ExxonMobil and Chevron dropped noticeably, with Q1 net profits down 45.8% and 36.9% year-on-year, respectively. Experts believe the three major European energy giants have strong trading businesses, while their American competitors, ExxonMobil and Chevron, rely more heavily on crude oil extraction and are hampered by adverse factors such as time lags between product sales and settlement in the derivatives market. Stephen Innes, managing partner at Swiss SPI Asset Management, stated that the large European energy companies are no longer just traditional oil firms; they are now more like “traders” adept at volatility arbitrage within the global energy system, “benefiting from rising oil prices and profiting considerably from market turmoil itself.”