By Jarrett Renshaw and Sheila Dang
On July 3 (Reuters) - U.S. oil companies are about to announce their biggest quarterly profits in years, which could lead to tensions with President Donald Trump. He has been urging major oil companies to lower gasoline prices before the midterm elections in November.
After months of complaints from Americans about high gas prices, Exxon Mobil and Chevron are expected to report second-quarter earnings in the upcoming weeks that are more than three times their earnings from the first quarter. Oil prices surged after the U.S.-Israeli conflict with Iran began in late February, tightening global fuel supplies.
Forecasts suggest oil companies' profits will be at their highest since 2022. This boom could make the usually friendly relationship between Trump and the oil industry more complicated, as the industry has been a key supporter of Trump and the Republican Party.
Rising gasoline prices have led to increased calls for affordability from Democrats who aim to regain control of Congress. Additionally, high fuel costs have hurt Trump’s approval rating, as many Americans doubt the worth of the costs associated with the Iran war.
The administration has asked the U.S. Justice Department to look into possible price gouging at the gas pump. Treasury Secretary Scott Bessent warned that producers and refiners could face action from the White House if gas prices do not drop significantly.
“The industry is definitely discussing how to address this, but we know what’s coming. We understand the politics,” said an anonymous industry executive.
Since shipping through the Strait of Hormuz resumed last month, Trump has stated he wants the national average gas price to decrease to around $2.50 a gallon, much lower than the current average of approximately $3.85 and also about 11% below the lowest price during his presidency, which was around $2.81 in late December.
Lobbyists from the oil industry have increased their outreach to officials and lawmakers to reduce criticism, according to interviews with eight lobbyists and industry representatives.
Oil executives claim they have limited control over retail gasoline prices. Crude oil prices make up nearly half of what consumers pay at the pump, while the rest is determined by refining, distribution, marketing, and taxes.
However, while benchmark crude prices have returned to pre-war levels, U.S. gasoline prices remain about 22% higher than before the conflict. Analysts and industry groups point to tight fuel markets and low gasoline inventories, rather than crude oil prices alone, as the main reasons for this discrepancy.
Bob McNally, president of Rapidan Energy Group, noted that this situation reflects ongoing supply and demand pressures.
“Gasoline prices do not always follow crude oil prices, especially during significant global disruptions that affect supply, refining, and inventories,” said Bethany Williams, a spokesperson for the American Petroleum Institute.
The American Fuel & Petrochemical Manufacturers stated that policymakers influence prices as well, highlighting regulatory costs.
“Refineries don’t set the price of finished gasoline; crude oil is just one of many inputs,” they noted. For example, the Renewable Fuel Standard mandates that retailers sell a certain amount of fuel containing ethanol or other biofuels.
The White House has emphasized that Trump’s main goal is to lower gasoline prices, pointing to falling oil prices since the Iran agreement and increased cooperation with the oil industry on regulations.
Exxon declined to comment, while Chevron referred to a June 25 interview with CNBC, in which CFO Eimear Bonner mentioned that it would take time for gasoline prices to stabilize.
BUMPER PROFITS
Analysts predict that Big Oil's second-quarter earnings will be the strongest since 2022, when Russia’s invasion of Ukraine disrupted energy markets. According to estimates from analysts compiled by LSEG, Exxon Mobil is expected to report about $15.9 billion in adjusted net income, more than tripling its earnings from the first quarter. Chevron is forecasted to reach about $9.9 billion, also more than three times its prior quarter earnings.
Part of this increase will likely come from correcting first-quarter accounting losses related to derivatives used for hedging crude and refined products. However, analysts believe the larger gains stem from stronger market fundamentals.
Energy advisory firm TPH estimates that U.S. gasoline crack spreads—the difference between the price of crude oil and the fuels produced from it—averaged about $25 a barrel in the second quarter, up around $16 from the previous quarter. They also indicated that diesel crack spreads rose about $15 to roughly $45 a barrel, marking the strongest margins since mid-2022. Strong demand for U.S. exports has increased profits as international refiners experienced short supplies due to the war.
Despite the high prices for U.S. drivers, analysts from BMO Capital Markets expect oil companies to accelerate share buybacks in the second half of 2026, maintaining a post-pandemic focus on returns rather than production growth.
“Being the bad guy isn’t exactly enjoyable,” said one executive. “But we need to educate officials that this is a cyclical industry, and no one cares when the market changes and we are the ones taking all the risks.”
(Reporting by Jarrett Renshaw in Washington and Sheila Dang in Houston; Additional reporting by Arathy Somasekhar and Nicole Jao; Editing by Nathan Crooks and David Gregorio)