Key Takeaways
- ExxonMobil and Chevron beat third-quarter estimates on Friday, with adjusted EPS of $4.23 and $5.28 against $4.13 and $4.88 expected.
- Higher refining margins were the strongest part of both quarters and also the most exposed, though a million barrels of Venezuelan oil is far too little to end that windfall.
- Valero just had its worst day since April 2025, and a reopened Strait of Hormuz would hit fuel margins much harder than any Venezuelan shipment.
- Exxon trades at about 13x forward earnings, near its five-year average, but analysts already expect those earnings to fall by 2028.
ExxonMobil (XOM) and Chevron (CVX) just gave investors the quarter they wanted. Both beat Wall Street’s third-quarter estimates on Friday, and both credited the same thing: higher margins on gasoline and diesel.
That’s the profit President Trump says is about to shrink. On Tuesday, ahead of a rally in Corpus Christi, Texas, he posted that a million barrels of Venezuelan oil were arriving, the “first shipment of BILLIONS of Barrels to come,” and that “Gasoline and Diesel Prices will soon come plummeting down.”
Refiners had a rough day. Valero (VLO) closed down 9% that day, its worst session since the April 2025 tariff selloff, and two other big refiners fell about 7%. (Valero was already lower before the post, as fuel futures fell faster than crude.)
Refining did the heavy lifting
Here’s where the money came from:
- ExxonMobil earned $4.23 a share in adjusted EPS, ahead of the $4.13 Bloomberg consensus.
- Exxon’s own preview, filed Oct. 16, had higher refining margins adding about $4.5 billion against the second quarter, while weaker oil prices took away about $1.3 billion.
- Chevron’s adjusted EPS of $5.28 beat the $4.88 analysts expected, and its adjusted earnings nearly tripled from a year ago, to $10.4 billion from $3.6 billion.
- Chevron’s US refineries ran a record 1.09 million barrels a day, at close to 98% of capacity.
Higher crude prices helped Chevron too. But at Exxon, refining did all the work, and oil prices held the quarter back.
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The best part of the quarter is the most exposed
Those margins are huge right now. Valero’s refining margin hit $39.24 a barrel in its third quarter, nearly triple the $13.14 of a year earlier.
Analysts were already counting on much of this before Friday. Chevron’s consensus normalized EPS jumps to $17.52 for 2026, from $7.29 in 2025, then falls to $13.17 by 2028:
Chevron (CVX): normalized EPS, actual and consensus estimates, $ per share, fiscal 2023-2028 (TIKR)
So the Street already expects the windfall to shrink. Still, its 2028 figure is about 80% above what Chevron earned in 2025. Friday’s beat gives analysts no reason to cut 2026, but the years after depend on what happens to fuel prices.
Exxon’s margins have been climbing too. Its operating margin more than doubled to 15.9% in the June quarter, from 6.4% in March, its best in three years:
ExxonMobil (XOM): operating (EBIT) margin (%), last 12 quarters (to June 30, 2026) (TIKR)
(Timing effects pulled March’s quarter down and pushed June’s up, so the jump looks a bit bigger than it really was.)
Refining is also a much bigger part of the business than it used to be. Exxon’s CFO said on its second-quarter call that its fuels business had grown from about 9% to about 23% of business-line earnings over five years.
A million barrels won’t move the pump
The problem with Trump’s promise is scale. Luisa Palacios of Columbia University, a former Citgo chair, put the shipment at roughly 6% of what US refiners process in a single day. “Against the U.S. refining system, it’s negligible,” she told Newsweek.
Meanwhile, oil is on track for its fourth straight monthly gain. Brent’s December contract traded around $117 on Friday, headed for a 13% gain in October, after a tanker in the Strait of Hormuz was hit by explosives that a small boat attached to its hull.
Exxon’s management has tied this year’s fuel margins to roughly 3 million barrels a day of refining capacity cut off by the Strait’s closure. My read: when that capacity comes back, gasoline and diesel margins come down far faster than any Venezuelan tanker could push them.
The political pressure won’t go away either, with the midterms next week. Asked on CNBC about windfall profits, Exxon CEO Darren Woods said “the last thing you want to do is discourage more supply.”
Exxon’s multiple looks average on peak earnings
Exxon trades at about 13x forward earnings, right around its five-year average and well below the 23x it hit in March:
ExxonMobil (XOM): forward (NTM) P/E, last 5 years (TIKR)
The last time earnings spiked like this, in 2022, the market paid as little as 6.6x. And analysts see Exxon’s normalized EPS falling from $13.29 this year to $10.62 in 2028. Measured on the 2028 estimate, the stock is pricier than its five-year average.
My take: The refining windfall is real, but I’d count it as a bonus and value Exxon on what it earns once the Gulf calms down. A reopened Strait would end that windfall much faster than Venezuelan barrels, and an average multiple on war-year earnings leaves little cushion for that.
Of course, Friday’s tanker attack shows the Strait could stay shut longer than anyone hopes. Exxon’s corporate plan update, expected in December, will show what management thinks the business earns after the war.
So what is ExxonMobil stock actually worth?
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