Chaos in Energy Markets Boosts Big Oil Earnings

Summary

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WSJ What's News – Chaos in Energy Markets Boosts Big Oil Earnings

Date: July 31, 2026
Host: Alex Osolev (The Wall Street Journal)
Guest: Colin Eaton (WSJ U.S. Oil Companies Reporter), Amira McKee (WSJ Reporter)

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Episode Overview

This PM edition episode dives into the turmoil in global energy markets and its dramatic impact on the earnings of major U.S. oil companies. The discussion explores the causes behind surging profits at ExxonMobil and Chevron, the shifting dynamics in fuel markets, the challenges of U.S. oil expansion in Venezuela, and the effect of public health scares on California’s lettuce growers. The episode also includes top business headlines, market reactions, and regulatory updates.

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Key Themes & Discussion Points

1. Big Oil’s Blockbuster Earnings Amid Energy Market Chaos

(Main Segment: 00:33–05:59)

• Record Profits Driven by Fuel Shortages
  • ExxonMobil reported $14.5 billion in Q2 earnings (more than double YoY, highest since 2022).
  • Chevron posted a record $12.1 billion for the quarter.
• Production Expansion and Technological Advances
  • Exxon’s CEO (via reporter): “In the upstream, excluding the Middle east, we delivered our highest production volumes in more than two decades.” (Colin Eaton quoting Darren Woods, 02:49)
  • Expansion fueled by acquisition of Pioneer Natural Resources for increased drilling capacity in Texas’ Permian Basin.
  • “These are four mile horizontal laterals, that's about 70 football fields. And they've been doing all kinds of experiments with new technologies out there.” (Colin Eaton, 03:12)
• Key Drivers: Fuel Margins vs. Oil Prices
  • Early price surge due to the Iran war subsided, but refinery profits soared due to shortages in jet fuel, diesel, and gasoline.
  • China and Russia sharply reduced their fuel exports, tightening supply further.
  • “It's never been more profitable to make those fuels. They're pumping out as much as they can, and yet we're still draining inventories of oil and fuels.” (Colin Eaton, 04:25)

2. U.S. Oil in Venezuela: Opportunities and Obstacles

(Segment: 04:43–05:56)

• Chevron’s Cautious Expansion
  • Chevron, the sole active U.S. oil producer in Venezuela, boosted production by 15% to 280,000 barrels/day.
  • Growth lags behind U.S. government hopes due to regulatory, tax, and political hurdles.
• Longstanding Barriers
  • “Venezuela historially has just been a really tough place to do business and going back is really daunting task.” (Colin Eaton, 05:38)
  • Ongoing negotiations to improve fiscal terms, but alternatives like Guyana look more attractive to oil majors.

3. Additional Headlines and Market Summaries

(Segment: 05:59–08:11)

• BP to Exit North Sea Operations
  • BP plans to sell its UK North Sea assets, ending more than 50 years of operations to refocus on higher-yield projects.
• Tech Stock Movements
  • Amazon jumps 15% after strong earnings (biggest gain since 2012).
  • Apple shares fall over 7% following disappointing forecasts, erasing nearly $358 billion in market cap (third-largest one-day loss for a U.S. company).
  • Nasdaq down 3.2% for the month, its sharpest drop since March.
  • Dow slightly up; S&P modestly down.
• Kalshi Lawsuit
  • New York AG sues prediction market Kalshi for alleged illegal gambling, seeking up to $36 billion in penalties.
  • Kalshi maintains its operations are covered by federal, not state, regulation; calls suit “political theater.”
• OpenAI Milestone
  • Surpasses 1 billion active users, 2 million business customers; price cuts to compete with Anthropic.

4. California’s Lettuce Dilemma During Health Scare

(Segment: 08:11–11:59)

• Cyclospora Outbreak Dampens Demand
  • Fear of a parasite outbreak (despite lack of evidence for U.S.-grown lettuce) leads to sharp retail and restaurant sales drops.
  • Producer Larry Cox: sales down 20–30% at Coastline Products; “The only thing worse than losing 100% of your growing costs is losing a penny more.” (Amira McKee, 10:28)
• Farmer Strategies
  • With plummeting demand and perishable crops, many farmers “plow over their fields,” turning harvest-ready lettuce back into the soil.
• Farmer’s Market Trend
  • Minor uptick in direct-to-consumer sales at farmers markets, but “most of the industry sells to grocery stores, restaurants, food distributors. The kind of scale that they'd be able to sell at a farmer's market just wouldn't be able to make up for those losses.” (Amira McKee, 11:48)
• Public Health Messaging
  • No official evidence supports linking U.S. produce to Cyclospora; consumer confusion contributes to sales plunge.

5. Additional News

(Interspersed: 08:11–09:30)

• Ceuta Migrant Crisis
  • At least 57 deaths during the rush to the Spanish territory, with most migrants returning to Morocco.
  • Analysts suspect Morocco orchestrated the mass crossing as a political signal.
• Paramount-Warner Bros. Merger Lawsuit
  • California AG sues to block the merger; Gov. Gavin Newsom quietly worries blocking the deal could hurt Hollywood jobs but has no official say in the lawsuit.

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Notable Quotes & Memorable Moments

• On Exxon’s Production Surge:
  “In the upstream, excluding the Middle east, we delivered our highest production volumes in more than two decades.”
  — Colin Eaton quoting Exxon CEO Darren Woods (02:49)

• On U.S. Fuel Market Chaos:
  “It's never been more profitable to make those fuels. They're pumping out as much as they can, and yet we're still draining inventories of oil and fuels.”
  — Colin Eaton (04:25)

• On Lost Lettuce Sales:
  “The only thing worse than losing 100% of your growing costs is losing a penny more.”
  — Larry Cox via Amira McKee (10:28)

• On Consumer Confusion During Outbreak:
  “To be clear, there are no public health officials or evidence to attest that domestic grown lettuce is linked to Cyclospora.”
  — Amira McKee (10:56)

• On Farmer’s Market Limits:
  “The kind of scale that they'd be able to sell at a farmer's market just wouldn't be able to make up for those losses from decrease in demand.”
  — Amira McKee (11:48)

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Timestamps for Important Segments

• Energy market overview & Big Oil earnings: 00:33–05:59
  • Exxon & Chevron earnings: 00:33–03:42
  • U.S. oil production strategies: 02:58–03:42
  • Fuel markets & refining: 03:42–04:43
  • Chevron in Venezuela: 04:43–05:56
• BP North Sea exit & Kalshi lawsuit: 06:00–06:35
• Tech stocks, Nasdaq, Amazon & Apple: 06:36–07:20
• California lettuce crisis: 08:11–11:59
  • Impact on growers: 10:07–10:50
  • Consumer confusion: 10:50–11:16
  • Farmer’s market impact: 11:16–11:56

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Summary

This episode spotlights how geopolitical disruptions, particularly the Iran war, have upended global fuel markets and delivered record windfalls to U.S. oil giants by elevating refinery margins. Behind the scenes, production surges in Texas underpin Exxon's rise, while political uncertainty dogs Chevron’s efforts in Venezuela. Elsewhere, shifting regulatory winds are shaking up business from New York to Hollywood. Meanwhile, an ambiguous health scare decimates demand for California lettuce, revealing the fragility and scale dependence of America’s produce supply chain. Robust reporting and expert insights guide listeners through a high-stakes, interconnected economic landscape.

Transcript

[IBM Representative]

So there's a lot of noise about AI, but time's too tight for more promises. So let's talk about results. At IBM, we work with our employees to integrate technology right into the systems they need. Now a global workforce of 300,000 can use AI to fill their HR questions, resolving 94% of common questions, not noise. Proof of how we can help companies get smarter by putting AI where it actually pays off, deep in the work that moves the business. Let's create smarter business. IBM.

[Alex Osolev]

A chaotic quarter for energy markets helped US Oil companies log eye popping earnings.

[Colin Eaton]

Where the crisis has moved now is in fuel. So we're talking about the big three fuels, jet fuel, diesel and gasoline.

[Alex Osolev]

Plus, California filed a lawsuit to block the Paramount Warner Brothers merger. Gavin Newsom is concerned about it and why perfectly edible lettuce is rotting in the fields. It's Friday, July 31st. I'm Alex Osolev for the Wall Street Journal. This is the PM edition of what's news, the top headlines and business stories that move the world today. We kick off tonight's show in New York where the state's attorney general has filed a lawsuit against prediction market Kalshee. The suit says that the company runs an illegal gambling operation and the attorney general's office is asking the court to ban Kalshee in New York. If the case succeeds, Kalshee might have to pay as much as $36 billion in penalties and repayments. Kalshee and other prediction markets argue that states have no right to regulate them since their markets are more akin to Wall street trading overseen by federal regulators. A Kalshi spokeswoman called the New York suit quote, political theater. And OpenAI said today that it has more than a billion active users and 2 million businesses using its artificial intelligence models. OpenAI has been cutting prices for some of its models, part of an effort to get more users and help it keep up with its big rival, Anthropic. America's largest oil companies reported a blockbuster quarter after the oil disruption caused by the Iran war sent energy prices soaring. ExxonMobil's earnings for the quarter rose to $14.5 billion, more than double from a year earlier and their highest level since 2022. And Chevron reported $12.1 billion, its highest quarterly earnings on record. But how exactly did these oil companies reach these milestones? And do they expect the good times to last? Colin Eaton covers U.S. oil companies for the Journal and joins us from Texas. Colin Exxon CEO Darren woods said on the company's earnings call today that outside the Middle east oil and gas production has grown a lot this year.

[Colin Eaton]

In the upstream, excluding the Middle east, we delivered our highest production volumes in more than two decades.

[Alex Osolev]

Colin, how and where were they able to increase production?

[Colin Eaton]

Where Exxon's boosting its production is primarily in the Permian Basin here in Texas. A few years ago, they bought this smaller company, really big in West Texas called Pioneer Natural Resources, and that's given them sort of this huge Runway to keep drilling these really giant Wells. These are four mile horizontal laterals, that's about 70 football fields. And they've been doing all kinds of experiments with new technologies out there. So that's kind of where they are boosting output.

[Alex Osolev]

So the production part of it makes sense given the disruptions we'd seen in this trade of horror booths. But was that the major reason that they saw such huge gains this past quarter?

[Colin Eaton]

So the disruption initially caused a spike in oil prices, but those prices have come down, and that's because we're not using as much oil around the world. Where the crisis has moved now is in fuel. We're talking about the big three fuels, jet fuel, diesel and gasoline. So what's happened is because there's less oil coming out of the Middle East, China cut the amount of oil that it's turning into fuel. They've cut the amount of fuel that they're exporting. Russia did the same. So there's just a lot less product on the market. So those, those prices are under a lot of pressure, basically for Exxon and for Chevron, what that means is the refining margins on making those fuels, they're essentially at record levels. So it's never been more profitable to make those fuels. They're pumping out as much as they can, and yet we're still draining inventories of oil and fuels.

[Alex Osolev]

I want to shift to talk about Venezuela a little bit. Chevron is the only active US Oil producer in the country, and the company has boosted oil production 15% over the past six months to about 280,000 barrels a day there. But that's not really living up to what the Trump administration was pushing a lot of these oil majors to do earlier this year to start or restart operations in the country.

[Colin Eaton]

A big part of the holdup is that there's this long history of dealing with the Venezuelan government. In Venezuela, they have really high taxes and royalty structures. They've had tough regulations. They really needed to overhaul their hydrocarbon law, which they've done. But the oil industry believes that there's still fixes that need to be made. Chevron CEO Mike Wirth on the call today said that they're in negotiations with Venezuela to try to improve fiscal terms. But Venezuela historically has just been a really tough place to do business and going back is really daunting task. It's hard to justify it to your shareholders when there's opportunities elsewhere. In fact, nextdoor in Guyana, for example,

[Alex Osolev]

that was WSJ reporter Colin Eaton. Thank you, Colin.

[Colin Eaton]

Thank you.

[Alex Osolev]

In other energy news, BP is putting its UK North Sea business up for sale. It wants to focus on projects that have a higher return. Selling off the business would mean that the British energy major would end production in its home country after more than half a century. And heads up that we've got a special bonus episode that dropped earlier today in what's News and Earnings. We look at worries about private credit at the country's biggest private investment firms. That's in your what's News feed now. A big rally in tech stocks to close out the month. That left the Nasdaq up 1%, with the Dow and S and P not far behind. One thing coming into play here is a relief rally after situational awareness. The hedge fund focused on AI that we told you about yesterday sold the bulk of its stock holdings. Some fund managers said the news of that transaction removes a big reason for investors to worry about potential for selling by situational. Amazon stock shot up more than 15% after its strong earnings report, its biggest climb since 2012. But not all tech stocks got a bump. Apple's shares tanked after its forecast disappointed investors. They closed down more than 7%. That translate to a loss of almost $358 billion in market cap today, the third largest one day decline in market cap for any U.S. company ever. It was a pretty dramatic month overall for the Nasdaq, which dropped 3.2% in July. It was its sharpest decline since March. The Dow ended up slightly in the green, while the S and P was modestly lower on the month. Coming up, how California growers are dealing with wilting demand for lettuce during the cyclospora outbreak. More after the break.

[IBM Representative]

The thing about AI for business, it may not automatically fit the way your business works. At IBM, we've seen this firsthand. But by embedding AI across hr, IT and procurement processes, we've reduced costs by millions, slashed repetitive tasks, and freed thousands of hours for strategic work. Now we're helping companies get smarter by putting AI where it actually pays off, deep in the work that moves the business. Let's create smarter business.

[Alex Osolev]

IBM, we've got an update on the migrant crisis going on in the Spanish territory of Ceuta, which we told you about on this morning's show. Spanish officials said that at least 57 people died during the rush to enter the territory, mostly by drowning. Of the 50,000 or so people who did make it in, most have now voluntarily crossed back into Morocco, which is just next to Ceuta. Several thousand immigrants are still roaming the streets, and that's worrying residents. The incident raises questions like who organized such a sudden and massive crossing, especially if it wasn't so that the migrants could claim asylum in Spain. Several analysts said it looked like it was orchestrated by the Moroccan government and was less about immigration than regional politics. Moroccan officials didn't immediately respond to requests for comment. We're exclusively reporting that California Governor Gavin Newsom has expressed concerns about the state's lawsuit that seeks to block Paramount's acquisition of Warner Brothers Discovery. The Journal has learned that Newsom has told people involved that he's worried that if the deal is blocked, it could harm jobs in Hollywood. Newsom's office has encouraged Attorney General Rob Bonta to find a resolution out of court. However, Newsom doesn't have a role in the litigation and he doesn't have authority over the state attorney general's actions. Representatives for Newsom and Banta decline to comment. The outbreak of the cyclospora parasite has been hurting sales at some restaurants like Taco Bell, but it's also affecting what people buy at the grocery store. For example, Data from Nielsen IQ shows that heads and bags of lettuce were down 8.7% in the four weeks through July 18 compared with last year. That's leaving the farmers who grow that lettuce with some tough choices. The Journal's Amira McKee has been talking to those farmers. Amira so fewer shoppers to buy lettuce is translating to fewer grocery stores buying it, right? What does that mean for farmers?

[Amira McKee]

These growers, who are based mostly in Salinas Valley, California, they've seen cutbacks from restaurants, food distributors and grocery stores. And these lettuce producers, as one told me, Larry Cox, that across his company, Coastline Products, different produce items, sales were down 20 to 30%. Cox said the only thing worse than losing 100% of your growing costs is losing a penny more. So because they can't afford to pick and store lettuce, lettuce has a short shelf life and so you can't really hold onto it. So instead the best choice for them is to plow over their fields, which means that they Chop up the harvest ready lettuce and till it back into the ground.

[Alex Osolev]

What is worrying consumers here? I mean, have health officials said that domestically grown lettuce is contaminated?

[Amira McKee]

There's an incredible amount of confusion among consumers. To be clear, there are no public health officials or evidence to attest that domestic grown lettuce is linked to Cyclospora. Americans have been cutting back on their consumption and purchase of fresh produce and lettuce. But there's really no evidence suggests that produce should be cut out altogether.

[Alex Osolev]

What about farmers markets? Those seem to be getting more popular. Could that help these growers make up for some sales not coming from stores and restaurants?

[Amira McKee]

It really does seem like American consumers have become more interested in farmers markets across the country. Different operators I spoke to described an increase in foot traffic from folks who want to have a smaller sort of supply chain at attached to the fresh produce that they're eating right now. But when it comes to the larger industry of lettuce, farmers markets represent a very small portion of farmers. And so most of the industry sells to grocery stores, restaurants, food distributors. The kind of scale that they'd be able to sell at a farmer's market just wouldn't be able to make up for those losses from decrease in demand.

[Alex Osolev]

That was the Wall Street Journal's Amira McKee. Thanks, Amira.

[Amira McKee]

Thanks, Alex.

[Alex Osolev]

And that's what's news for this week. Tomorrow you can look out for our weekly markets wrap up what's news in markets? Then on Sunday we'll be discussing how investors already have access to private companies like Anthropic if they hold big tech stock. That's in what's New Sunday. And we'll be back with our regular show on Monday morning. Today's show was produced by Anthony Bansi with supervising producer Talia. Michael Lavall wrote our theme music. Aisha El Muslim is our development producer. Chris Zinsley is our deputy editor. And I'm Alex Osola. Have a great weekend and thanks for listening.

[IBM Representative]

So there's a lot of noise about AI, but time's too tight for more promises. So let's talk about results. At IBM, we work with our employees to integrate technology right into the systems they need. Now a Global workforce of 300,000 can use AI to fill their HR questions. Resolving 94% of common questions, not noise. Proof of how we can help companies get smarter by putting AI where it actually pays off, deep in the work that moves the business. Let's create smarter business. IBM.