Why are oil company profits so high?

**Sarah Rogers** (0:01)
Big Oil announces big profits, but Donald Trump says they're making too much. It's World Business Express from the BBC World Service. I'm Sarah Rogers. Also, why Apple has launched a legal challenge against the UK government, and one of the world's biggest games publishers could be about to disappear from the stock market?
Now, there's no doubt that the war in Iran has been costly for consumers with surging energy bills, but for oil companies, it's been good for business. Today, the world's top oil exporter, Saudi Arabia's state-owned Aramco, has reported a net profit of almost $33 billion in the three months to the end of June. That's a 40% increase on the previous quarter. The UK's BP reported a profit of $5.7 billion over the same period, a four-year high. It's a rather different story to the impact the war in Iran has been having on consumers around the world, including these drivers in the US.

**Isaac Steyl** (1:05)
What is it?

**Sarah Rogers** (1:06)
$4 right here?

**Isaac Steyl** (1:06)
This is kind of insane.

**Sarah Rogers** (1:08)
It's happening so fast, it's only going to get worse.

**Isaac Steyl** (1:10)
I definitely am feeling the pinch. I travel a lot, and yes, this is very expensive.

**SPEAKER_4** (1:16)
You know, I look at the new prices and I expect them to go down, but I mean, obviously, they're going up, and I just don't understand.

**Sarah Rogers** (1:22)
Well, the jump in the price of crude oil since the closure of that vital straight of Hormuz has benefited all energy companies, including US firms, and President Donald Trump says they're making too much.

**SPEAKER_2** (1:34)
Chevron, too much money.
ExxonMobil, too much, too much money. When you look at one company where they made 12 times what they made the year before, they're going to give some of that back to the public, and they better cut the retail price, the consumer price.

**Sarah Rogers** (1:51)
Well, environmental and poverty campaign is a blasted BP for profiteering. I put that claim to Matt Stanley, who's head of market engagement at data company Kepler.

**Matt Stanley** (2:00)
Look, it's a fair question, one a few people asked me this morning. The way that we have to differentiate what is happening in oil markets is, if you look at it through the optics of where Brent or crude oil is trading, which has largely been pretty flat, that's an unfair assessment of how oil markets are performing, because the end user puts gasoline or petrol or diesel into their cars, not crude oil. So this is all a story around refining assets and how those margins are performing. So for example, when the petroleum products that the end user purchases, what is the price of those versus the price of the crude oil that's going in to make those products?
And put simply, there is not enough refining capacity globally, especially in Europe, in order to meet demand. And that's what's causing oil prices or diesel and gasoline prices to become so elevated. The difference between those prices and how those margins are fairing is basically how the likes of BP and Shell and Exxon and Chevron are all making money.

**Sarah Rogers** (3:03)
You say making money, they're huge profits, four-year highs.

**Matt Stanley** (3:07)
When you own a massive asset like a big refinery, like Saudi Aramco, one of the biggest oil company in the world, BP as well as in Europe, some years are good and some years are bad. Five years ago, those refining margins were almost negative.
And there was no conversation around the president of the USA didn't say, well, we'll subsidize those refineries because they're actually losing money. It's the extent of where capitalism lies. They employ thousands of people, they keep the economy moving. Last quarter was very good, who knows? In a year's time, that could be a negative quarter.

**Sarah Rogers** (3:43)
Will this kind of bring into question again around windfall tax? I mean, Trump says they should give some of the money back to the people.

**Matt Stanley** (3:50)
Yeah, but he also was also one of his things during his manifesto when he was running for office again was drill baby drill. It says it drill baby drill, but only to a certain point that I'm happy you make him profits against. Look, it's it's a balancing act. And where we are in a Goldilocks moment, when it comes to how much investment the likes of Shell and BP and Chevron and Exxon in the US, that goes back into the system, goes back into infrastructure, back into the local economy.
Good for jobs. Is it is it bad for the end user? Look, supply is there. It just happens to be the market dynamics are showing extremely profitable margins.