Exxon flags biggest profit in 13 years due to surging oil prices

Exxon's announcement augurs booming profits across the oil industry. PHOTO: REUTERS

HOUSTON (BLOOMBERG) - Exxon Mobil signalled its highest profit since 2008 as Russia's war in Ukraine upended global commodity markets.

Exxon's announcement that first-quarter profits may have reached almost US$11 billion (S$15 billion) augurs booming profits across the oil industry as trade sanctions, shipping disruptions and surging demand strain supply lines.

The windfall does not come without risks, however. Political leaders are under pressure to alleviate sky-high energy prices and the spectre of shortages, and some have already accused oil drillers of gouging and profiteering.

United States President Joe Biden last week pleaded with the industry to reinvest profits in new wells to help plug the supply gap from shunned Russian crude. At the same time, he warned of punishing financial penalties for companies slow-walking projects involving federally owned oil prospects.

Exxon said on Monday (April 4) that first-quarter results may have been as much as US$2 billion higher than earnings during the final three months of 2021, when the company raked in US$8.8 billion, according to a filing.

Surging oil prices were the main driver, with natural gas and fatter refining margins also contributing. International crude futures touched a 14-year high of almost US$140 a barrel during the quarter.

Separately, Exxon formally approved the US$10 billion Yellowtail development off the coast of Guyana after receiving government and regulatory approvals. The project is the fourth and largest in an area known as the Stabroek Block, and is expected to pump about 250,000 barrels a day starting in 2025.

Exxon also disclosed that exiting the Sakhalin-1 oil development in Russia's far east may trigger a write-down of as much as US$4 billion. The company recently pledged to quit Russia due to international sanctions and what the company's chief executive officer Darren Woods described as the nation's "needless destruction" in Ukraine.

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