Cairo: Hani Kamal El-Din Â
The global oil industry is witnessing a sharp correction, as energy giants scramble to adapt to falling prices, weakening demand, and rising pressure from investors. After two years of robust performance fueled by geopolitical shocks, the sector is now entering a phase of contraction and uncertainty.
đ A $90 Billion Reversal in Fortune
Combined earnings across the five Western oil majorsâShell, ExxonMobil, BP, Chevron, and TotalEnergiesâhave plummeted by nearly $90 billion since their peak in 2022. The dramatic reversal reflects a market grappling with declining oil prices, softening global demand, and growing investor skepticism.
This downturn has spurred internal reviews of spending policies, with several companies now preparing to scale back capital expenditure for the first time since the COVID-19-induced slump of 2020.
đ˘ď¸ From Windfall to Warning Signs
Just two years ago, these firms were flush with cash as energy markets responded to the fallout from Russiaâs invasion of Ukraine. But the tide has turned. Oil prices have retreated, global growth is cooling, and renewable energy pressures continue to erode the long-term outlook for fossil fuels.
Brent crude, which averaged $81 per barrel in 2023, is expected to settle around $64 in the second half of 2025, according to consensus forecasts. This price drop is already straining the financial flexibility of even the most resilient firms.
đ¸ Dividends in Doubt as Cash Flow Tightens
While some companies insist they will maintain shareholder returns, analysts remain skeptical. Shell, for example, has stated it can sustain dividends even if Brent drops to $40 a barrel. Others, such as Italyâs Eni, have announced budget cuts of $500 million to preserve balance sheet strength.
BP, already under pressure for its climate strategy pivot, faces additional scrutiny over its promise to return 30â40% of cash flow to shareholdersâa goal now seen as ambitious in a depressed pricing environment.
ExxonMobil, traditionally a symbol of strength, is navigating the storm with a large portfolio of long-term projects. However, analysts caution that if prices fall below $60 a barrel, even Exxon may be forced to trim shareholder rewards to preserve capital discipline.
𧞠Smaller Players Bear the Brunt
Beyond the oil majors, independent and shale producers are feeling the heat. In the U.S., several shale operators have slowed drilling activity and implemented workforce reductions to manage costs.
Meanwhile, oilfield services providers like Halliburton and Baker Hughes have issued early warnings about stalled project pipelines, pointing to possible disruptions across upstream supply chains.
đ Investors Await Q1 Results with Caution
Investors are now looking to first-quarter earnings reports for signs of stabilityâor further trouble. BP will report first on Tuesday, followed by TotalEnergies on Wednesday, and Shell, Chevron, and ExxonMobil on Friday.
With few expecting strong results, attention will shift to forward guidance. Key questions include whether companies will reduce spending further, delay major projects, or revise dividend policies to conserve cash.
đ ď¸ Strategic Retooling Ahead of the Energy Transition
The current downturn is not merely a cyclical dipâit may represent a deeper structural shift. As the global economy gradually transitions toward lower-carbon energy, traditional oil players are under pressure to adapt or risk irrelevance.
For some, that means pivoting toward natural gas, carbon capture, or low-carbon fuels. For others, it requires a return to financial basics: spending less, drilling smarter, and maximizing output from existing assets.
Whatever the path, the era of automatic profit growth appears over. The oil majors must now prove they can deliver value in a world where the rules of the game are changing.
