Big Oil Faces Profit Squeeze Amid Trump's Trade Policies

The major U.S. oil corporations, Exxon Mobil and Chevron, have revealed their lowest earnings in years due to declining oil prices and increased material costs driven by tariffs. As production plans remain steady, market uncertainties cast shadows over the industry's future.

The two largest oil companies in the United States, Exxon Mobil and Chevron, have reported a substantial decline in first-quarter profits, marking the lowest figures in years. This downturn is largely attributed to the ongoing economic repercussions of President Donald Trump’s trade policies, which have taken a toll on consumer confidence and caused a drop in oil prices.

Recent figures show that U.S. crude oil prices fell below $60 a barrel this week, a critical threshold where many oil companies struggle to profit from new drilling ventures. Compared to the time just before Trump took office, crude oil prices are currently approximately $20 cheaper per barrel. The situation is further complicated by increased costs for steel and other essential materials resulting from the tariffs imposed by the administration.

The impact of these tariffs is already evident—with indications that some companies are scaling back operations. For example, the number of active drilling rigs in the Permian Basin—the largest oil field in the U.S.—has decreased by 3 percent over the past month, based on data from Baker Hughes, a company that provides oil field services. This decline is compounded by customers opting to postpone discretionary spending, leading industry executives to predict reduced expenditures across the sector for the year ahead.

Chevron, the second-largest oil company in the country, announced earlier this year that it plans to cut its spending in 2025 and has yet to revise its forecasts for annual production or capital investments. Eimear Bonner, Chevron’s chief financial officer, expressed a sense of stability amidst the turbulence, stating, “We’ve navigated cycles before. We know what to do.”

The financial reports from Exxon Mobil and Chevron reflect market conditions prior to the announcement of Trump’s latest tariffs. Meanwhile, the producers’ cartel known as OPEC Plus has revealed plans to accelerate oil output, adding another dynamic to an already uncertain market landscape.