Oil Giants Face Profit Decline Amid Tariff Challenges

In a difficult first quarter, Exxon Mobil and Chevron reported their lowest profits in years while navigating economic headwinds from President Trump’s trade policies. The results underscore a falling oil price and rising material costs, prompting concerns about production spending.

The two major U.S. oil companies, Exxon Mobil and Chevron, reported a significant decline in their first-quarter profits, a situation exacerbated by the economic consequences of President Trump’s trade policies. These policies have not only diminished consumer confidence but have also led to a drop in oil prices. Recently, U.S. crude prices dipped below $60 a barrel, a critical threshold for profitability in drilling new wells, marking a $20 decrease from the prices just before Trump's administration.

Compounding the issue, tariffs imposed by the president have inflated the costs for essential materials, including steel, which could further strain operating budgets for oil and gas firms. As a result, data from Baker Hughes indicates a 3 percent decrease in rig counts in the Permian Basin, the nation’s most productive oil field, within just one month. Executives have noted a trend where companies within the industry are postponing discretionary spending, which is likely to trigger a broader contraction in spending throughout the year.

Chevron has previously announced intentions to reduce expenditure, maintaining its forecasts for production and capital spending moving forward. Eimear Bonner, Chevron's CFO, expressed confidence in their current position, asserting familiarity with navigating economic fluctuations. The financial reports from both Chevron and Exxon reflect conditions prior to Trump’s announcement of additional tariffs. Meanwhile, unexpected moves from OPEC Plus members to increase oil production further add to the market's unpredictability.