World Stock Watch

Chevron’s Q4 Earnings Disappoint as Refining Margins Slump

The oil giant’s fourth-quarter earnings fell short of Wall Street estimates, dragged down by weak refining margins that pushed its downstream business into a loss for the first time since 2020.

Refining Margins in Free Fall

CEO Mike Wirth warned that the downtrend in refining margins is likely to persist this year, citing a post-pandemic demand surge that has faded and economic activity that has faltered in the United States and China, the two largest oil consumers. As a result, Chevron’s downstream business lost $248 million in the fourth quarter of 2024, a stark contrast to the profit of $1.15 billion in the same period a year ago.

Fuel Sales Tumble Across the Industry

Profit on fuel sales plummeted across the industry last year, with Chevron’s U.S. fuel sales falling 3% year-over-year. Weak jet fuel demand exacerbated troubles for the Houston-based company’s domestic business, with margins softening in both U.S. and international markets.

Record Output Offers a Silver Lining

While refining struggled, Chevron’s oil production held relatively flat in the fourth quarter at 3.35 million barrels of oil equivalent per day, compared with 3.39 million boepd a year ago. Production from the Permian Basin of Texas and New Mexico grew 14% year-over-year to a record 992,000 boepd, bringing the company within touching distance of a target to reach 1 million boepd in the top U.S. oilfield this year.

Future Growth Plans

Chevron expects its global output to grow 6% to 8% this year, and 3% to 6% in 2026, assuming Brent crude oil prices of around $70 a barrel. The company also plans to focus on the Gulf of America, renaming the region known internationally as the Gulf of Mexico, in a nod to an executive order by U.S. President Donald Trump to rechristen the ocean basin.

Dividend Hike and Share Buybacks

Chevron hiked its quarterly dividend 5% to $1.71 per share and reaffirmed expectations of adding $10 billion in free cash flow over the next two years. The company also pledged to continue buying back $10 billion to $20 billion of its shares each year, depending on market conditions.