Big Oil Companies Refuse to Back Down Despite Softening Oil Prices
In a bold move, major oil companies are standing firm on their budgets despite the recent decline in oil prices and the looming increase in global oil supply. This decision may seem reckless to some, but it is a strategic play that could pay off in the long run. According to a report by Oilprice.com, the likes of Exxon, Chevron, Shell, and TotalEnergies are doubling down on their growth plans, rather than scaling back.
The first quarter of the year saw a decline in net profits for these companies, with ExxonMobil reporting a drop to $7.7 billion from $8.2 billion a year ago. Chevron’s earnings fell more sharply to $3.8 billion from $5.4 billion, while Shell saw a 28% drop in Q1 profit. TotalEnergies reported a more modest 5% dip. However, none of these companies indicated any plans to cut spending or retreat from their strategic objectives. In fact, they are doing the opposite, with many raising their production targets and sticking to their growth plans. As Oilprice.com notes, “With demand picking up in Asia and OPEC+ preparing to unwind production cuts faster than expected, Exxon, Chevron, Shell, and TotalEnergies are digging in—ready to pump more, not less.”
TotalEnergies saw its oil and gas output rise 4% in Q1, driven by increases in Brazil, the U.S., Malaysia, and Argentina. Exxon is targeting a 7% production increase for the year, while Chevron is aiming for 9%. Even Shell, which has been more cautious, continues to aggressively buy back shares and refuses to blink on capital expenditure. The only supermajor to tweak its plans was BP, and even that move was driven by pressure from activist investor Elliott Management.
The real test for these companies comes now, as OPEC+ is reportedly planning to increase production by as much as 2.2 million barrels per day by November. According to sources cited by Bloomberg, the Saudis have lost patience with Iraq and Kazakhstan, which have been serially exceeding their quotas. However, many of the companies responsible for Kazakhstan’s overproduction are Western majors, including Chevron, Exxon, Shell, and TotalEnergies. As Oilprice.com quotes Rystad Energy analyst Mukesh Sahdev, “The presence of U.S. companies like ExxonMobil and Chevron in Kazakhstan could play a key role in driving the supply growth. This raises questions about the potential for U.S. backing to pressure OPEC+ into adding more barrels to the market.”
This development raises the question of whether a supply war is brewing. There are certainly signs that point to this, with China’s crude imports hitting a 20-month high in March and India’s imports from Russia also increasing. When prices fall, the world’s biggest buyers step in, and Big Oil is counting on this. As prices soften, demand will rebound, and the majors want to be front and center when that happens. This explains why they are not panicking over Q1 earnings declines. They are playing the long game.
However, U.S. shale producers are not as relaxed. At sub-$60 Brent and WTI hovering near $56, the economics for independents are breaking down. Bloomberg reports that EOG Resources has cut $200 million from its 2025 capital expenditure and dialed back production growth from 3% to 2%. JPMorgan analysts called EOG “the canary in the coalmine”—a warning that more revisions may follow. As Oilprice.com notes, “While shale drillers have made impressive gains in efficiency over the last decade, they’re still more exposed to price shocks than the vertically integrated supermajors.”
Big Oil companies, on the other hand, have a mix of conventional, deepwater, and shale projects, and balance sheets that have been padded by years of capital discipline. They can afford to wait out the noise and are betting that the current softness in prices will be short-lived. When the rebound comes, they will be in position to dominate. Meanwhile, OPEC+ is also feeling the pressure, and its decision to accelerate the rollback of production cuts suggests a cartel trying to get ahead of a deteriorating market.
In conclusion, the next few months could set the tone for the next chapter of the global oil market. Will Big Oil companies pull back if Q2 earnings disappoint? Possibly—but not likely. So far, they have shown every intention of outlasting the storm. And if that storm happens to knock out weaker rivals in the process, all the better. As Oilprice.com reports, the majors are preparing for a long game, and it seems they are ready to see it through.
The global oil market is likely to witness a significant shift in the coming months, with Big Oil companies leading the charge. Their strategic decision to maintain production levels and investment in the face of softening prices is a testament to their confidence in their long-term strategy. As the market continues to evolve, one thing is certain – the players that adapt and innovate will be the ones that thrive in the new landscape.
According to Irina Slav, writing for Oilprice.com, “In short, the next few months could set the tone for the next chapter of global oil. Will the majors pull back if Q2 earnings disappoint? Possibly—but not likely. So far, they’ve shown every intention of outlasting the storm. And if that storm happens to knock out weaker rivals in the process, all the better.”
It will be interesting to see how the dynamics of the global oil market play out in the coming months. One thing is certain, however – the major oil companies are preparing for a long and potentially brutal battle for market share.
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