European majors see their profits melt away

oil priceoil priceParis: The European oil majors saw their profits plummet in the third quarter due to the fall in oil prices and refining margins against a backdrop of weak global growth, but are showing good profitability and continuing to generously reward their shareholders.

For TotalEnergies, this is even the biggest drop in profits since the pandemic. Its net income fell by 65% in the third quarter of 2024, at $2.3 billion (1.9 billion Swiss francs), almost as much as –65,7% of the fourth quarter of 2020, in the midst of Covid-19.

Same thing for BP. The British oil giant, which was also affected by asset write-downs, published a profit of 206 million dollars on Tuesday compared to 4.9 billion a year earlier. It is “of the most difficult three months society has experienced since the pandemic“, noted Danni Hewson, analyst at AJ Bell.

Shell, the other British oil and gas giant, revealed on Thursday a sharp decline in net profit in the third quarter, to 4.3 billion dollars, compared to 7 billion in the same period last year. It too suffered from falling refining margins and oil prices.

We are far from the stratospheric profits of 2022, when the oil majors rode the surge in gas and oil prices in the wake of the post-pandemic economic recovery and the Russian invasion of Ukraine.

Shell and TotalEnergies then reaped the highest annual profits in their history, at $42.3 and $20.5 billion respectively.

Oil prices are today structurally contained by weak demand from China, the leading importer of crude, and by forecasts of abundant production in 2025. They were pulled upwards at the end of the third quarter in the face of renewed tension in the Middle East, which fuels volatility.

BP was less than optimistic for the fourth quarter of 2024. The company expects refining margins “remain weak“and that production”or lower” to that of the last three months.

Amid modest global economic growth and geopolitical tensions in the Middle East, oil prices are volatile“, estimated TotalEnergies for its part.

The American election, a factor of volatility

Overall, the uncertain economic environment, including concerns over China's growth, continues to pose demand uncertainties” of oil, underlines Keith Bowman, analyst at Interactive Investor.

More “Geopolitical tensions in the Middle East and potential supply disruption provide some support for prices“.

Aside from the Middle East, more technical factors are helping oil prices hold up as investors see the price of Brent BRENT Brent, or North Sea crude, is a variation of crude oil serving as a benchmark in Europe, listed on the InterContinentalExchange (ICE), a stock exchange specializing in energy trading. It became the first international standard for setting oil prices. dive under the 70 dollars due to estimates from the International Energy Agency (IEA), which predict a very abundant oil market in 2025.

Thursday around 10:10 GMT, the price of a barrel of Brent BRENT Brent, or North Sea crude, is a variation of crude oil serving as a benchmark in Europe, listed on the InterContinentalExchange (ICE), a stock exchange specializing in energy trading. It became the first international standard for setting oil prices. from the North Sea, for delivery in December, was trading at 72,62 dollars.

Added to this are political elements. “The American election is also a significant factor of volatility“, warns John Plassard, analyst at Mirabaud. He explains that a victory for Donald Trump, “who is in favor of fossil fuels“, could push prices up in the short term.

These hazards do not prevent the oil majors from happily rewarding their shareholders.

TotalEnergies expects $2 billion in share repurchases in the fourth quarter of 2024, “in order to reach 8 billion dollars over the year“, according to Patrick Pouyanné.

Shell, for its part, announced a new share buyback program of $3.5 billion for the next three months.the 12th consecutive quarter in which we announced repurchases of $3 billion or more“, indicates the British giant.

BP finally plans “at least $14 billion in share buybacks by 2025“. The group completed $1.75 billion in share buybacks in the second quarter and is preparing to do the same in the fourth quarter.

(c) AFP

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