Big Oil Prepares for Lower Prices by Saving Cash

The oil majors are preparing for lower prices by allocating dollars in a way that suggests they're anticipating leaner times. This approach is prudent, given the cyclical nature of the oil business and the fact that lower prices are always around the corner.

The sector's profits have been boosted by high oil prices, with ExxonMobil Holdings Corp., Chevron Corp., Shell Plc, TotalEnergies SE, and BP Plc reporting net income of more than $47 billion in the second quarter. However, rather than returning this windfall to shareholders through share buybacks or larger dividends, they've focused on paying down debt and restructuring operations.

Chevron reduced its leverage by about $8 billion, while Exxon slashed its debt. BP warned staff of potential oversupply and lower oil prices in the coming months. Shell and Total kept their share buybacks below last year's levels despite higher oil margins.