OPEC+ has delayed its planned rollback of oil production cuts as major international oil companies ramp up production, particularly U.S. supermajors hitting record output levels. While OPEC+ tries to manage global oil supply, these companies have increased their production, contributing to higher global supply and complicating OPEC+’s efforts to control prices.
ExxonMobil, Chevron, Shell, BP, and TotalEnergies all reported growing oil and gas production in the third quarter, compared to the same period last year. These “Big Oil” companies are focusing on expanding low-cost assets to meet global energy demand. Additionally, European oil majors have shifted away from renewable energy investments, refocusing on their core oil and gas operations.
Despite weaker oil and gas prices compared to last year, as well as lower refining margins, these companies’ rising output led to better-than-expected third-quarter earnings. However, increased production from non-OPEC+ countries, particularly from the U.S., Guyana, and Brazil, has added to the global oil supply, further challenging OPEC+’s strategy to curb oil output and manage prices.
OPEC+ Delays Production Cut Easing
OPEC+ announced on Sunday it will delay easing its production cuts until January 1, 2025, instead of the previously planned December 1 start. This decision was expected, as the group had already conditioned any increase in production on favorable “market conditions.” With global oil demand growing slower than anticipated, and non-OPEC+ countries increasing production, OPEC+ decided that adding supply in December would not support the market.
Big Oil Production Boosts Earnings
The increased production of the largest U.S. and European oil companies helped offset lower oil prices and weak refining performance. U.S. supermajors are breaking production records, particularly in the Permian Basin, contributing to strong third-quarter results.
ExxonMobil reported a significant earnings beat, with its liquids production reaching a 40-year high in Q3 2024. Output jumped 24% year-over-year to 4.6 million oil-equivalent barrels per day. The company credited its success to higher oil and gas production, especially from Guyana and its Permian assets. Exxon also highlighted its efficiency improvements, which have doubled its profit per oil-equivalent barrel from $5 in 2019 to $10 in 2024.
Chevron also reported strong earnings, driven by record U.S. production and increased output from the Permian Basin. The company’s global net oil-equivalent production rose 7% year-over-year, thanks in part to the acquisition of PDC Energy. U.S. production alone increased by 198,000 barrels per day, setting a new quarterly record. Chevron’s capital expenditures are now about half of what they were a decade ago, reflecting greater efficiency.
European Majors See Production Gains
While U.S. oil companies grabbed headlines with their record production, European majors, except TotalEnergies, also reported higher oil and gas output. Shell raised both its liquids and LNG production. Despite lower crude oil prices and refining margins, Shell’s strong operational performance in its Integrated Gas, Upstream, and Marketing segments allowed it to exceed earnings expectations.
BP also posted better-than-expected earnings, though profits were lower compared to last year and the previous quarter due to weaker oil prices and refining margins. BP’s upstream production rose by about 3%, with liquids production increasing by 5%.
OPEC+ Faces Challenge from Big Oil
The supermajors are increasingly focusing on growing low-cost, lower-emission production. This shift could further undermine OPEC+’s supply-management policies and its ability to control global oil prices.
Related Topics:
- Oil Prices Decrease as OPEC Data Creates Worries About Demand
- OPEC Daily Basket Price Reached $77.66 Per Barrel on Friday
- Russia: OPEC+ Has No Plans for Oil Production Talks