**Goldman Sachs has warned that global oil stocks are approaching their lowest level in 8 years, with the speed of depletion becoming a growing concern as the Strait of Hormuz remains restricted. The latest escalation saw Iran attack several ships in the Strait of Hormuz and set a UAE oil port on fire, causing oil prices to rise by about 6% in the largest escalation of violence since President Donald Trump tried to use the U.S. Navy for freeing up shipping four weeks ago. According to Goldman Sachs, total global oil stock currently stands at 101-days of global demand and could drop to 98-days by the end of May. The bank estimates that commercially refined products have been reduced from a stock of 50 days of demand prior to the U.S.-Israel war against Iran, down to 45% today, with buffers for easily accessible refined products rapidly approaching very low levels.
Major oil companies delivered robust first-quarter earnings driven by soaring oil and gas prices, with Exxon Mobil reporting adjusted earnings above analyst estimates as price increases more than offset lower production in the Middle East and Kazakhstan. Chevron also beat expectations with a 4% rise in upstream earnings, while BP saw its underlying replacement cost profit more than double from the previous quarter. TotalEnergies posted a 29% annual increase in profits with a 41% quarter-over-quarter increase, both attributed to strong trading results. According to reports from Investing.com India, these companies are benefiting significantly from the 80% increase in oil prices since the start of 2025, yet are maintaining disciplined spending approaches despite a global oil supply shortfall of more than 10 million barrels daily. The Wall Street Journal notes that oil prices had gone up by as much as 80% since the start of 2025, yet the biggest players in oil and gas had no intention of changing their spending plans for the year.
Despite strong earnings, major oil companies are prioritizing shareholder returns and financial discipline over production expansion. Chevron returned $6 billion to shareholders during the first quarter, including $3.5 billion in dividends and $2.5 billion in buybacks. Exxon Mobil reported one-year total shareholder return growth of 48% with distributions totaling $9.2 billion. BP maintained its dividend and capital expenditure plans unchanged despite substantial price changes, while TotalEnergies announced plans to buy back $1.5 billion in stock during the second quarter. As reported by Investing.com India, these companies are reaffirming their focus on shareholder returns, debt reduction, and capital discipline rather than committing to substantial production increases. The Wall Street Journal confirms that Big Oil is sticking to the strategy it developed during the last lean-time part of the industry cycle, with companies not biting despite strong temptation to respond to the Middle East supply shortage.
Oil executives are maintaining disciplined approaches amid what they describe as unprecedented market volatility. ConocoPhillips CEO Ryan Lance stated that the macro environment remains volatile and impossible to predict, emphasizing the need for clear, consistent, and durable priorities. Chevron's Mike Wirth noted that while the company could increase production, he doesn't know what the future looks like. The Strait of Hormuz crisis has created uncertainty about when regular traffic will resume, with energy executives suggesting it would take several months for flows to normalize and prices to decline, even if traffic resumes immediately. According to Investing.com India, companies are sticking to pre-war production plans that mostly included modest growth in areas like the Permian Basin and Guyana. The Wall Street Journal cites the chief executive of ConocoPhillips as saying, "The macro environment remains volatile and pretty impossible to predict. Amid such uncertainty, it's critical our priorities remain steadfast. They are clear, consistent, and they are durable."
The Middle East crisis has created a complex supply-demand dynamic that is reshaping energy markets. The disruption has made many governments accelerate investments in alternative energy sources to replace lost oil and LNG cargoes, potentially casting a shadow over future hydrocarbon demand. However, the crisis has also highlighted the irreplaceable nature of oil and gas for human civilization, with applications extending beyond energy to fertilizers and electronics manufacturing. Exxon's Darren Woods noted that assurances would be necessary for uninterrupted oil and gas flows via the Persian Gulf for prices to decline. Despite these challenges, some companies are showing cautious optimism, with the industry returning to Canada's oil patch as a potential sign of future demand recovery. The supply shortfall of more than 10 million barrels daily is already starting to cause demand destruction, yet Big Oil is resisting the temptation to expand output or capex to offset these temporary losses.
