BP and Shell are next week expected to post lower third-quarter profits than in 2023 against a backdrop of weak oil prices and faltering demand.
The energy giants warned of a slump in profit margins at their oil refining businesses – major parts of the firms’ overall income streams – earlier this month.
The slide in margins comes partly as a result of a more general downturn in global demand for oil recently, across consumer and industrial sectors.
Brent crude prices remain about 10% down since the start of 2024.
That is despite escalating tensions in the Middle East and fears over how conflict could impact energy sites in the region, which pushed prices up a little in recent weeks.
Opec, the cartel of major global oil producing nations, also lowered its outlook for worldwide oil demand growth this year and next, in a report earlier this month.
Economic slowdowns in major economies including China, along with a growth in electric car sales, have contributed to the fall.
Analysts at Jefferies expect Shell to post a 14% decline in net income for the third quarter, versus the same period last year, coming in at 5.4 billion US dollars (£4.1 billion).
While the company is expected to continue with a programme of buying back shares to reward investors, bosses may face fresh questions about the giant’s UK listing, after boss Wael Sawan fuelled speculation earlier this year that it could abandon London for Wall Street.
Mr Sawan said the London Stock Exchange was an “undervalued location” in an interview in April. Shell’s share price has fallen by about 6% over the last year.
Meanwhile, analysts expect BP’s net income to come in 30% less than the same period last year, at 2.3 billion US dollars (£1.7 billion).
The company said it expects the slump in refining margins to take a 400 million to 600 million dollar ((£306 million to £459 million) chunk out of its third-quarter profit.
BP shares have fallen 24% in the last year as CEO Murray Auchincloss seeks to scale back the firm’s renewable energy plans and focus on oil and gas to regain investor confidence.
The firm unveiled a plan to cut oil and gas output by 40% in 2020 while rapidly boosting its green business, but that was cut to 25% in 2023 after the departure of former boss Bernard Loony.
Reports by the Reuters news agency suggest BP has decided to further shrink its renewables ambitions to increase profits, but the company has not commented.
BP reports third-quarter results on Tuesday and Shell on Thursday.
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