\n<\/p>\n
LONDON: Oil majors are set to \u200bpost a big jump in third-quarter profit as the US-Israeli war on Iran has boosted refining and trading results, \u200cwhile investors will monitor how wisely they use their cash piles and whether they resist a spending spree.<\/strong><\/p>\n The severe disruption of the Strait of Hormuz since US-Israeli airstrikes began the war in February has pushed energy prices to multi-year highs, allowing trading desks to profit from the volatility.<\/p>\n In a sector \u200bnotorious in the past for boom and bust, the majors have all promised this time to refrain from losing \u200bcontrol of costs in what is one of the highest-earning years for global oil producers in \u2060recent memory.<\/p>\n Shell, BP, and TotalEnergies all expect refining margins to increase three- to fourfold in the third quarter from a year ago, with \u200bShell guiding for a record high of $42 a barrel. TotalEnergies expects cash flow from its refining and chemicals business to double to \u200baround $4 billion from the previous quarter.<\/p>\n Exxon signalled higher refining margins in the quarter could boost downstream profit by $4.5 billion versus the previous quarter.<\/p>\n ARE MAJORS ADAPTING THEIR SPENDING PLANS?<\/strong><\/p>\n As majors report third-quarter results at the end of the month, investors are asking whether they will stick to their existing spending plans in \u200btimes of exceptional earnings, wrote RBC Capital Markets analyst Biraj Borkhataria in a research note.<\/p>\n So far Chevron and Exxon have used \u200bthe money to pay down debt. Investors in Chevron will monitor investment in Venezuela and its progress toward extending its contract to operate the \u200cTCO \u2060joint venture in Kazakhstan, which is developing the country\u2019s largest oilfield, analysts said.<\/p>\n HSBC expects Shell to announce a $3.5 billion buyback for the fourth quarter, after it reduced the pace of its buyback programme to a quarterly $3 billion earlier this year.<\/p>\n BP\u2019S FORTUNES TURN<\/strong><\/p>\n After the major\u2019s trading update last week, investment bank TPH called BP its favourite name among European majors. It said BP\u2019s underlying profit could exceed $7 billion, \u200bversus $5.7 billion in the second \u200bquarter, boosted by refining and \u2060gas marketing and trading.<\/p>\n of time during the week last week and what could have happened but didn\u2019t was all the pressure on core weave and the ability of them to pay for their their build out<\/p>\n That cash is going toward repairing BP\u2019s balance sheet. Citi data shows BP\u2019s net debt to operating cash flow falling from 1.7 times at the end of 2025, the \u200bhighest of the five biggest majors, to an expected 0.8 times by the third quarter.<\/p>\n BP is \u200blikely to discuss \u2060its future capital allocation during its third-quarter earnings, HSBC said, as BP hits a target to reduce its net debt about a year early, also helped by pausing its buyback programme this year. BP has flagged a strategy update on December 15.<\/p>\n \u201cWe believe the priority \u2060will remain \u200bfirmly on deleveraging, with stable capex and no buyback resumption before 2028,\u201d said \u200bHSBC\u2019s Kim Fustier and Sadnan Ali in a note.<\/p>\n Shell and Total are due to report on October 29 while BP, Chevron and Exxon are due on October \u200b30.<\/p>\n \u00a0<\/p>\n<\/div>\n