Big Oil Faces a Harsh Reality: The Era of ‘Monster Profits’ Is Over

Oil giants like ExxonMobil, Chevron, Shell, and BP face tough choices as crude prices fall — dividend cuts, job losses, and a shift to survival mode.

Big Oil’s Golden Age Fades — Belt-Tightening Begins

After a record-breaking 2022, when soaring energy prices following Russia’s invasion of Ukraine helped Western oil majors reap nearly $200 billion in combined profits, the global oil industry is entering a new phase of austerity.

With crude prices weakening and margins shrinking, energy supermajors such as ExxonMobil, Chevron, Shell, BP, and TotalEnergies now face a trio of hard choices:

Cut costs and scale back operations,

Reduce dividends and share buybacks, or

Take on new debt to keep shareholders happy.

This marks a dramatic shift from just a few years ago, when these companies were flush with cash and celebrated for their “generous” investor returns.

Dividend and Buyback Policies Under Pressure

According to Maurizio Carulli, global energy analyst at Quilter Cheviot, several major oil companies have been returning up to 50% of cash flow from operations (CFFO) to shareholders in recent quarters.

In today’s lower-price environment, however, Carulli warns that continuing this policy could push firms beyond safe debt levels.

BP and TotalEnergies have already announced plans to scale back shareholder returns — a move Carulli described as “sensible” and likely to be mirrored by others.

“Cutting a dividend would send shivers through Wall Street,”
said Clark Williams-Derry, energy finance analyst at the Institute for Energy Economics and Financial Analysis (IEEFA).
“It’s better to trim buybacks — they’re the gravy, while dividends are the meat.”

His remarks underscore how sensitive investors remain to any signal that could erode confidence in Big Oil’s financial resilience.

‘Monster Profits’ Become a Distant Memory

In 2022, U.N. Secretary-General António Guterres famously accused Western oil companies of being “drunk on monster profits” as they reaped huge rewards amid global turmoil.

Fast forward to 2025, and the picture has changed dramatically.

Crude prices have softened, OPEC+ continues to release spare capacity, and global inventories are rising. Analysts at S&P Global Ratings warn that oil prices could fall into the $50-per-barrel range next year if oversupply persists.

Facing these headwinds, energy majors have cut jobs, streamlined operations, and reduced capital expenditure. Some have postponed or scaled down new exploration projects to preserve cash flow.

A Tough Strategic Crossroads

Williams-Derry says Big Oil is now forced to answer three defining questions:

Should they keep borrowing to maintain shareholder payouts?

Should they cut buybacks, removing one of the main props for share prices?

Or should they slow drilling and accept weaker future production?

Each path carries risk — from shareholder backlash to falling equity valuations or slower long-term growth.

Many analysts now refer to this as Big Oil’s “moment of reckoning” — a period when the industry must rebuild for a lower-margin, lower-carbon future.

Green Transition Adds More Pressure

Beyond market volatility, the global energy transition poses an even greater challenge.

Governments across Europe and North America are tightening emissions policies, while investors increasingly demand sustainability and accountability.

As a result, Big Oil is being pushed to diversify portfolios, pouring billions into renewable energy, hydrogen, and carbon capture projects — all of which carry far thinner profit margins than traditional drilling.

“Oil majors are running a race against time — trying to stay profitable while proving they have a future in a low-carbon economy,”
said Peter Low, co-head of energy research at Rothschild & Co Redburn.

Crude Prices Slip Further — and Outlook Remains Cautious

As of Friday, Brent crude futures for December delivery were down 0.4% at $64.97 per barrel, while U.S. West Texas Intermediate (WTI) fell 0.3% to $61.24.

Despite the pullback, analysts say prices have shown surprising resilience, staying in the $65–$70 range longer than many expected earlier this year.

“It’s been less gloomy than anticipated,”
said Low.
“But by the fourth quarter, companies will likely need to reconsider how much they can return to shareholders.”

Earnings season will provide more clarity: Shell and TotalEnergies are set to report third-quarter results on October 30, followed by ExxonMobil and Chevron on October 31, and BP on November 4.
Markets will be watching closely to gauge how deep the cuts may go.

The Future of Big Oil: Leaner, Smarter, and Less Flashy

While the short-term outlook appears challenging, analysts argue that Big Oil’s fundamentals remain strong enough to weather the storm.

However, the traditional model of high prices and record payouts is no longer sustainable.

The industry is entering an era where discipline and efficiency matter more than growth for growth’s sake.

“Big Oil will need to adapt to living with lower prices — less glamorous, but ultimately more resilient,”
Carulli concluded.

🛢️ Conclusion:
The days of “monster profits” are over. As crude prices weaken and energy transition accelerates, Big Oil stands at a crossroads — forced to reinvent itself not just to thrive, but to endure in a world moving beyond fossil fuels.

FAQ: Big Oil’s Profit Crunch

1. Why are oil companies’ profits declining?
Falling crude prices, growing inventories, and slowing demand have significantly reduced profit margins.

2. Why are companies cutting dividends or buybacks?
To preserve balance sheet health and avoid excessive debt as cash flow tightens.

3. Is this a repeat of the 2020 oil crisis?
Unlikely. Companies are now better diversified and more disciplined in managing capital and costs.

4. What’s next for Big Oil?
Diversifying into renewables, tightening spending, and redefining long-term strategies to survive in a decarbonizing global economy.