What's going on?

Major oil companies like ExxonMobil, Chevron and Shell reported quarterly earnings late last week which showed that rising oil prices are definitely improving their bottom lines… but not necessarily enough to keep investors satisfied! [tweet this]

What does this mean?

Rising oil prices have been welcome news � if not for consumers, then at least for an industry which had weathered some pretty tough times following the dramatic slide of the oil price in 2014. Now that prices are just about back where they used to be, energy firms are raking it in: Shell, Chevron and French outfit Total all reported some of their best profit figures in years.


Exxon, however, still ended up earning less than investors expected for the second quarter in a row, thanks largely to some rough results from its refining business (which takes crude oil and turns it into a final product that businesses or individuals can use).

Why should I care?

The bigger picture: Geopolitics have a big impact on oil markets.

Oil prices jumped last week as investors appeared to take the view that US President Donald Trump will renege on a major international agreement brokered with Iran in 2015 that lifted a number of economic sanctions previously imposed on the country. Iran is one of the largest oil producers in the world; any new US sanctions would reduce its ability to sell its oil abroad and thus global oil supply (likely further raising the oil price).

For markets: Profit sharing is profit caring.

Even though the price of oil has increased some 30% since the beginning of 2017, energy stocks are lagging behind, up only 6% in the same period. As oil companies have started to benefit from the rise in oil prices, some � like Total � have buttered up investors by announcing higher dividends. As these companies pay back more and more of their newfound profits to shareholders, the value of their stock could start to rise more in line with that of the black gold.