Six months on from crude’s era-defining price crash and Big Oil is suffering from whiplash.
Prices may have stabilized around $40 a barrel as OPEC+ curbed supply, but as the coronavirus surges through Europe once again, the twin safety nets for majors in previous downturns — refining and trading — have come under severe pressure as consumers stay home.
“Refining margins are absolutely terrible,” Patrick Pouyanne, Total SE’s Chief Executive Officer, said earlier this month. The French major, along with a raft of other oil companies and refiners, have warned investors that slumping margins will be a drag on profits. For some like Exxon Mobil Corp., it might even push them into the red.
The third quarter will provide little respite to the supermajors with three out of the five expected to post losses. Trading, which brought the European firms a torrent of cash last quarter, is unlikely to save the day this time around.