TotalEnergies joined the chorus of oil companies warning that falling oil prices will drag down second-quarter profits.
The French energy giant earned about $7 less per barrel in the second quarter than in the first, it said. That’s enough of a drop to negate the company’s increase in production. ExxonMobil, Shell, and BP issued similar warnings in the past few days; global economic uncertainty and rising oil inventories in China have pushed the market into surplus, where analysts expect it to remain for the rest of the year. Oil prices are now hovering around the mid-$60 per barrel level, which Quantum Capital Group, a top investor in US shale producers, warned this week is “dangerously close” to being unprofitable for most companies.
In that kind of market, oil companies’ competitive edge comes from cutting their production costs as much as possible. The One Big Beautiful Bill Act signed by US President Donald Trump this month should help US producers to that end by expanding drilling tax credits and lowering royalties for exploration on federal land. And the outlook is a bit brighter for natural gas companies: Kinder Morgan, which builds pipelines and terminals, reported a second-quarter profit boost it attributed to growing demand for US natural gas overseas.