ExxonMobil Earnings to Fall on Lower Oil Prices

ExxonMobil, one of the world's largest oil and gas companies, is expected to report a significant decline in earnings for the fourth quarter of 2024, primarily due to lower oil prices. The company has warned that sharply lower oil refining profits and weakness across all its businesses will contribute to a decline in earnings. This article will explore the factors driving this decline, the expected magnitude of the earnings drop, and the potential long-term implications for ExxonMobil's upstream and downstream operations.



ExxonMobil's earnings are heavily influenced by changes in oil prices, as the company's upstream operations account for a significant portion of its earnings. In the fourth quarter of 2024, the company expects lower liquids prices to reduce its upstream earnings by $500 million to $900 million compared to the prior quarter. This decline is primarily due to the direct impact of lower oil prices on the company's upstream operations. Additionally, lower refining margins are expected to lower earnings by $300 million to $700 million, indicating a negative impact on the company's downstream operations.



The expected decline in earnings is significant, as it represents a decrease of approximately 18% from the third quarter of 2024 and 20% from the fourth quarter of 2023. This magnitude of decline is unusual for ExxonMobil, as the company typically maintains stable earnings throughout the year. The decline in earnings is primarily due to a combination of factors, including lower oil prices, weaker demand for gasoline and diesel, and excess supplies in the market. Additionally, the start of new oil refineries in Asia and Africa has led to increased competition and further reduced margins.

The potential long-term implications of lower oil prices on ExxonMobil's upstream and downstream operations are significant. The combination of lower upstream earnings and lower refining margins could lead to a significant reduction in ExxonMobil's overall earnings and potentially impact its ability to maintain its dividend payout, which is a key aspect of its investment appeal. Furthermore, lower oil prices could lead to a reduction in capital expenditure, which could impact the company's ability to maintain its production levels and potentially lead to a decline in its market share.

In conclusion, ExxonMobil's earnings are expected to fall significantly in the fourth quarter of 2024 due to lower oil prices and weaker refining margins. The potential long-term implications of this decline are significant, and investors should closely monitor the company's earnings and the broader energy market to assess the impact on ExxonMobil's operations and financial performance.