Exxon Mobil Corp. signaled its highest profit since 2008 as Russia’s war in Ukraine upended global commodity markets.
Exxon’s announcement that first-quarter results may have reached almost $11 billion augurs booming profits across the oil industry as trade sanctions, shipping disruptions and surging demand strain supply lines.
The windfall doesn’t come without risks, however. Key Democrats in the U.S. House of Representatives demanded Exxon and peers Chevron Corp., Shell Plc and BP Plc immediately halt dividends and share buybacks until the war’s conclusion, and scolded them for “profiteering off the crisis in Ukraine.”
Political leaders are under pressure to alleviate sky-high energy prices and the specter of shortages. U.S. 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.
The lawmakers faulted Exxon and the other three oil explorers of collectively spending $44 billion on buybacks and payouts last year and planning to shell out another $32 billion in 2022, according to a letter was signed by House Oversight Committee Chair Carolyn B. Maloney and Environment Subcommittee Chair Ro Khanna.
Exxon “is charging outrageous gas prices while seeing record profits,” Senator Ed Markey, a Massachusetts Democrat, said in a Facebook post. “We should tax Big Oil’s windfall profits and return that money to the working people of this country.”
Exxon said Monday that first-quarter results may have been as much as $2 billion higher than earnings during the final three months of 2021, when the company raked in $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 $140 a barrel during the quarter.
Separately, Exxon formally approved the $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 writedown of as much as $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.