Big Oil earnings expected to edge up as analysts eye 2026 outlook

Major oil companies are poised to report marginally improved third-quarter earnings sequentially, primarily driven by stronger refining margins and slightly higher oil prices, though many still anticipate year-over-year declines. Investors are keenly focused beyond Q3, seeking clarity on the 2026 outlook, including cost impacts from tariffs and the evolving gas market influenced by AI data center demand, especially given the International Energy Agency's forecast for a 4 million bpd surplus next year. Key areas of scrutiny for U.S. majors like Exxon Mobil and Chevron include refining performance, potential capital expenditure adjustments, acquisition strategies, and updates on Chevron's Hess integration, while TotalEnergies faces debt concerns and BP navigates a projected profit decline buffered by refining and pursues asset divestments.

Analysis

Big Oil is poised for a mixed third-quarter earnings season, with sequential improvements driven by stronger refining margins and a 2% QoQ rise in Brent crude prices, though year-over-year earnings are largely expected to decline. The market's primary focus, however, is shifting to the 2026 outlook, particularly commentary on cost impacts from tariffs and the evolving natural gas market dynamics influenced by increasing AI data center demand. This forward-looking perspective is critical given the International Energy Agency's forecast of a 4 million barrels per day surplus next year.

European majors present varied pictures; Shell and TotalEnergies anticipate 18% and 11% QoQ adjusted net income increases, respectively, but TotalEnergies faces significant investor concern over its 89% H1 2025 debt increase despite plans to cut buybacks and divest assets. BP expects a 10% YoY net profit decline, partially buffered by over 300% operating profit growth in its customers and products refining division, while pursuing the sale of its Castrol lubricants business.

For U.S. majors, Chevron's Q3 results will offer insights into the $55 billion Hess acquisition integration, with Hess projected to contribute $50 million to $150 million in adjusted earnings. Exxon Mobil could see up to a $700 million QoQ earnings lift from refining and analysts anticipate a reduction in its $2.5 billion annual early-stage capex, alongside potential M&A discussions.

Key Decisions for Investors

• Investors should prioritize forward guidance on 2026 market conditions, specifically monitoring company strategies to mitigate the projected 4 million bpd oil surplus and capitalize on AI-driven natural gas demand.
• Scrutinize individual company capital allocation decisions, including TotalEnergies' debt reduction and asset divestment plans, Exxon's potential capex adjustments, and BP's strategic asset sales.
• Evaluate the operational integration of recent M&A activities, such as Chevron's Hess acquisition, and remain alert for further consolidation opportunities, particularly from Exxon Mobil.