Big Oil majors posted strong earnings on higher prices but are not increasing production despite a major supply shortfall. Companies are prioritizing dividends, buybacks, and debt reduction instead of expanding output or capex. Ongoing Middle East disruption and volatile demand outlook are keeping producers disciplined, with any supply response delayed until conditions stabilize.
It is profit season again, and Big Oil is raking it in, both in Europe and in the U.S., as soaring oil and gas prices boost earnings. What they are not boosting, however, is production. Big Oil is signaling it has no plans to rearrange its priorities.
Higher oil prices drove the first-quarter adjusted earnings at Exxon above analyst estimates as the jump in prices more than offset lower oil and gas production in the Middle East and Kazakhstan. Chevron also beat analyst expectations with its first-quarter net result, reporting a 4% rise in upstream earnings specifically. BP reported a sharp rebound in first-quarter earnings, with its underlying replacement cost profit more than doubling from the previous quarter, thanks to stronger trading. TotalEnergies booked a 29% annual increase in profits, with the figure also representing a 41% on the final quarter of 2025. The French major also cited strong trading results as the driver of its quarterly results.
What none of these companies has done, however, is commit to any substantial increase in oil production to offset the supply temporarily lost due to the war in the Middle East. Instead, they reaffirmed their priorities focusing on shareholder return, debt reduction, and capital discipline—even with a global oil supply shortfall of more than 10 million barrels daily.
Chevron returned $6 billion to shareholders during the first quarter, including $3.5 billion in dividends and $2.5 billion in buybacks. Exxon boasted one-year total shareholder return growth of 48%, with distributions totaling $9.2 billion. BP left its dividend and capital expenditure plans for the year unchanged despite the substantial change in prices. TotalEnergies said it would buy back $1.5 billion in stock during the second quarter.
Big Oil, in other words, is sticking to the strategy it developed during the last lean-time part of the industry cycle. Big Oil is not biting, no matter how strong the temptation to respond to the Middle East supply shortage and avoid demand destruction, which is already starting to happen, anyway.
In an overview of the state of the industry, the Wall Street Journal last week noted oil prices had gone up by as much as 80% since the start of 2025, and yet the biggest players in oil and gas had no intention of changing their spending plans for the year. The publication cited the chief executive of ConocoPhillips as saying, "The macro environment remains volatile and pretty impossible to predict. Amid such uncertainty, it's critical our priorities remain steadfast. They are clear, consistent, and they are durable." Conoco's Ryan Lance certainly has a point: in such turbulent times that many are now calling unprecedented, and indeed, they are, stability is a much sought-after commodity, especially among energy investors.
The Middle East crisis has made many governments double down on alternative sources of energy to replace lost barrels of oil and LNG cargoes, potentially casting a shadow over the future prospects of hydrocarbon demand. At the same time, the crisis has highlighted just how vital hydrocarbons remain for the literal functioning of human civilization. The crisis has spread well beyond oil and gas themselves and into scores of industries that depend on them for feedstocks to produce anything from fertilizers to electronics. Oil and gas, in other words, remain irreplaceable—and yet demand is under threat by the supply disruption.
No wonder, then, that Chevron's Mike Wirth summed up what seems to be the dominant sentiment among industry executives as follows: "We could hit the gas and begin to grow again," Wirth said at the presentation of the company's first-quarter results. "But I don't know what the future looks like."
The most immediate question right now is, of course, when the Strait of Hormuz will reopen for regular traffic. A month ago, there was a lot more optimism about a swift end to the hostilities between the U.S. and Israel, and Iran. Now, nobody knows. Yet energy executives have repeatedly noted that even if traffic resumes tomorrow, it would take a couple of months for flows to normalize and prices to decline—and they may remain permanently higher.
Exxon's Darren Woods pointed this out at the company's first-quarter presentation. He suggested assurances would be necessary that oil and gas flows via the Persian Gulf will remain uninterrupted for prices to deflate. Until then, it seems, Big Oil will not lift a finger to ramp up production outside the companies' pre-war plans that mostly included modest production growth in places such as the Permian and, for Exxon, Guyana.
Meanwhile, however, Big Oil is returning to Canada's oil patch in what could be a sign of optimism for the future prospects of oil and gas—especially gas—demand. The industry remains cautious, but with an eye on a production boost as soon as market conditions are deemed suitable for such a move.
