Big Oil Prepares for Lower Prices by Reducing Debt and Restructuring

The oil majors are preparing for lower prices by allocating their dollars wisely, reducing debt and restructuring operations. This approach is prudent, given that oil is a cyclical business with prices always fluctuating.

In public, executives warn about the risk of higher prices if the Strait of Hormuz remains closed, but they're also quietly anticipating the possibility of $50-a-barrel oil in 2027 or 2028. The sector could afford to return more money to investors through share buybacks or larger dividends, but instead, it's prioritizing financial discipline.

Chevron reduced its leverage by about $8 billion in the second quarter, while Exxon and BP also slashed their debt. Shell and Total kept their share buybacks below last year's levels despite higher oil and refining margins. By setting aside money, Big Oil is building war chests to keep dividends growing during a potential downturn.