The prospect of crude remaining near the current $50 level is no longer a doomsday scenario for the world's oil majors whose latest earnings announcements show that cost-cutting lets them turn a profit even at these price levels. BP, Chevron, ExxonMobil, Shell and Total have all published results in recent days, showing they pocketed $23 billion in net profit in the first half fo the year.
Either they increased their earnings or at least returned to profit compared with the same period last year. With the exception of ExxonMobil they all benefitted from an increase in output from the same period last year, but more importantly they all profited from a rebound in crude prices as OPEC members and Russia agreed to limit production. The price of the international benchmark Brent crude averaged $51.7 per barrel in the first half of this year, up considerably from $39.8 during the same period last year.
While the profits are still less than half of what the firms turned in during the same period three years ago when Brent was trading at over $100 per barrel, they show that the major firms can survive profitably if crude prices stay at current levels, a scenario many now foresee.
“It is a tough environment and it could remain that way for some time,” said BP's chief executive Bob Dudley earlier this week. “But we are building a business that is resilient to these changing conditions,” he said.