Western oil majors post windfall profits as drone strikes hit Russia's refining sector

Major western oil companies have reported windfall profits as Ukrainian drone strikes and wider pressure on Russia's oil industry have lifted refining margins and eased fears of a looming surplus.

Source: Reuters

Details: Waves of Ukrainian drone attacks on Russia's network of refineries and export terminals since July have disrupted exports of Russian oil products, including diesel and fuel oil.

Kpler data shows that in September seaborne exports of oil products from Russia fell by 500,000 barrels per day from 2025 peaks to around 2 million barrels per day, the lowest in more than five years.

The drop in Russian exports boosted global refining margins, benefiting Shell, ExxonMobil, Chevron and France's TotalEnergies, which together operate close to 11 million barrels per day – more than 10% of global refining capacity.

The quartet posted a combined 61% quarter-on-quarter rise in refining profits in the third quarter, helping lift overall earnings by 20%.

Exxon, the largest US oil company, announced that profit at its Energy Products division had risen by more than 30% in the quarter to US$1.84 billion, citing "strong refining margins due to supply disruptions".

BP, which reports on Tuesday 4 October, also appears set to benefit. Its indicative refining margin climbed to US$15.8 per barrel in July-September, up 33%, and currently holds near US$15.1 per barrel in the fourth quarter.

Robust refining income will help offset weaker crude prices as the market enters a period of significant oversupply.

Background:

• Türkiye's largest oil refineries have begun purchasing more non-Russian crude oil in response to new Western sanctions on Russia.
• Chinese oil refiners have begun to avoid Russian supplies after the US and other countries imposed sanctions on major Russian oil producers and some of their clients.

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