BY RON BOUSSO
LONDON—Top oil and gas companies are watching the worsening global economic outlook with trepidation, but they currently appear to be doing little to correct course in the face of the approaching storm.
The level of uncertainty in global energy markets has shot up in recent months due to US President Donald Trump’s tariff flip-flops, stop-start negotiations over the Ukraine conflict, tightening sanctions on Iran, and growing signs of disagreement among OPEC and other major producers.
Crude prices have fallen by around $20 since the start of the year to $62 a barrel, significantly below the price energy majors need to maintain their spending plans while also delivering elevated shareholder returns without borrowing.
Probably of more concern to companies is a slump in long-term prices, shifting into a structure known as contango, where contracts starting in January 2026 trade below those further out, indicating weaker demand.
Executives are well aware of the worsening environment.
“We have indeed entered into a period of heightened macroeconomic and geopolitical uncertainty,” TotalEnergies CEO Patrick Pouyanne said on a call with analysts on Wednesday.
This “fluid landscape” is muddying the outlook for oil demand and operating costs while increasing volatility, he said, adding, however, that there is no need for now to panic or overreact.
Indeed, there is little to suggest companies have any plans to change their behaviour just yet.
Exxon Mobil, the largest US oil and gas producer, maintained its guidance for 2025 spending in a range of $27 billion to $29 billion, while TotalEnergies, Shell and Chevron also stuck to previous forecasts.
BP, which is facing a deep crisis, did reduce its planned annual spending by $500 million to $14.5 billion, with CEO Murray Auchincloss saying that could be cut by a further $2.5 billion if needed, a staggering figure that could lead to a contraction in production.
Basic household economics suggests that when times get tough – and could get tougher – it’s wise to cut back on costs and avoid borrowing. Therefore, one of the most telling signs of Big Oil’s “business as usual” stance is that companies have opted to take on more debt in order to maintain share buybacks and dividends.
Shell and TotalEnergies maintained steady rates of share buybacks in the first quarter of $3.5 billion and $2 billion, respectively, despite the weakening outlook. In the same period, Exxon paid $4.3 billion in dividends and repurchased $4.8 billion in shares, putting it on track to meet an annual share repurchase goal of $20 billion. – Reuters
