Energy giants are making significant investments in LNG, ignoring forecasts of peak gas demand.
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Aug 18 2025
0mins
Source: CNBC
Oil Majors' LNG Investments: Major oil companies like Shell, TotalEnergies, BP, Exxon Mobil, and Chevron are significantly increasing their investments in liquified natural gas (LNG), anticipating a rise in global demand despite concerns about the energy transition.
Concerns Over Environmental Impact: Analysts warn that LNG, while marketed as a cleaner alternative to other fossil fuels, poses environmental risks, particularly due to methane leaks, and may not serve as a viable "bridge fuel" in the shift towards renewable energy.
Discrepancies in Demand Forecasts: The International Energy Agency (IEA) projects that while LNG demand will grow, it may plateau by the end of the decade, contradicting the optimistic forecasts from oil majors, highlighting potential oversupply issues.
Geopolitical Risks and Market Dynamics: Geopolitical tensions, especially in Asia, raise concerns over reliance on fossil fuels, with countries vulnerable to LNG supply disruptions, prompting calls for careful capital budgeting among energy supermajors to ensure long-term profitability.
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Analyst Views on CVX
Wall Street analysts forecast CVX stock price to fall
19 Analyst Rating
15 Buy
4 Hold
0 Sell
Strong Buy
Current: 184.740
Low
158.00
Averages
176.95
High
206.00
Current: 184.740
Low
158.00
Averages
176.95
High
206.00
About CVX
Chevron Corporation is an integrated energy company. The Company produces crude oil and natural gas; manufactures transportation fuels, lubricants, petrochemicals and additives; and develops technologies that enhance its business and industry. The Company’s segments include Upstream and Downstream. Upstream operations consist primarily of exploring for, developing, producing and transporting crude oil and natural gas; liquefaction, transportation and regasification associated with LNG; transporting crude oil by major international oil export pipelines; processing, transporting, storage and marketing of natural gas; carbon capture and storage; and a gas-to-liquids plant. Downstream operations consist primarily of the refining of crude oil into petroleum products; marketing crude oil, refined products, and lubricants; manufacturing and marketing of renewable fuels, and transporting of crude oil and refined products by pipeline, marine vessel, motor equipment and rail car.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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See More
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- Shareholder Return History: Chevron has returned over $5 billion in capital to shareholders over the last 16 quarters, with $3.5 billion allocated to dividends, demonstrating the company's ability to consistently reward investors even in volatile markets, thereby enhancing investor confidence.
- Low Break-even Point: Chevron maintains a break-even price of $50 per barrel for Brent crude oil, thanks to investments in high-quality assets and disciplined cost management, allowing it to generate higher free cash flow in the current environment where prices are nearing $100 per barrel.
- Optimistic Market Outlook: The U.S. Energy Information Administration projects oil prices could peak at $115 per barrel in the second quarter and not fall below $90 until the fourth quarter, providing a strong tailwind for Chevron's earnings and further solidifying its position in the energy market.
- Investment in High-margin Assets: Chevron focuses on high-margin assets such as the Permian Basin and the Gulf of Mexico, successfully integrating Hess to gain a 30% stake in the Stabroek Block, ensuring future growth potential and competitive strength in the market.
See More
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- Outstanding Stock Performance: Since being removed from the Dow on August 31, 2020, ExxonMobil has achieved a staggering 373% total return, demonstrating its strong recovery capability amid market volatility and attracting increased investor interest.
- Successful Strategic Adjustments: In its corporate plan released in 2025, ExxonMobil expects to achieve $25 billion in earnings growth and $35 billion in cash flow growth by 2030, indicating a focus on sustainable development through efficiency improvements rather than capital expenditures.
- High Return on Investment: ExxonMobil forecasts a return on capital employed exceeding 17% by 2030, with cumulative surplus cash flow projected to reach $145 billion under the assumption of $65 Brent crude oil prices, further enhancing its financial robustness.
- Dividend Stability: With 43 consecutive years of dividend increases, ExxonMobil stands out as a favored high-dividend stock for investors, reflecting its stability and attractiveness in uncertain market conditions.
See More
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- Historical Context: The federal gas tax, established during the Great Depression in 1932, has never been suspended, but rising gas prices due to the Iran war have prompted the White House to explore additional energy relief measures.
- Tax Revenue Impact: The gas tax is set at 18.4 cents per gallon for gasoline and 24.4 cents for diesel, with a suspension costing the federal government approximately $115 million per day, or about $3.5 billion monthly, which could provide immediate consumer relief but raises concerns about long-term federal deficit and solvency.
- Congressional Support: President Trump indicated a willingness to reduce the federal gas tax, stating it would be suspended until deemed appropriate, requiring approval from both chambers of Congress, with states like Indiana, Georgia, and Kentucky already implementing their own tax holidays, reflecting growing support for this initiative.
- Funding Outlook: Despite not increasing since 1993, the Congressional Budget Office projects the Highway Trust Fund could run out of cash by 2028, and if the federal gas holiday is enacted, this could be accelerated to 2027, necessitating new revenue sources like a Mileage-Based User Fee to maintain fund solvency.
See More
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- Technical Warning: The S&P 500 Energy Index (.SPNY) is forming a head-and-shoulders pattern, which typically signals a shift from a bullish to a bearish trend, with the 'head' at 976.91 and the shoulders at 883.48 and 913.79, indicating potential market adjustments ahead.
- Price Alert Level: Currently trading at 872.41, a drop below 820 would confirm the head-and-shoulders formation, with analysts predicting a decline to 660, which would erase all gains made this year, reflecting a sharp shift in market sentiment.
- Weakening Oil Price Correlation: Although SPNY closely tracked oil prices earlier this year, this relationship has weakened recently, suggesting that energy stocks are now more influenced by broader equity trends and company-specific movements, highlighting market complexity and uncertainty.
- Concentration Risk: Nearly half of the energy sector's market value is tied up in just two stocks, Exxon Mobil (XOM) and Chevron (CVX), which could amplify market volatility, necessitating investor attention on how these companies impact overall sector performance.
See More
Oil Giants' Trading Units Report Strong Performance Amid Volatility
- Significant Trading Performance: In Q1 2026, TotalEnergies, Shell, and BP's trading units are estimated to have earned between $3.3 billion and $4.75 billion extra, showcasing strong performance during market volatility and reinforcing their competitive edge in the global energy market.
- Notable Profit Growth: TotalEnergies reported a quarterly net income of $5.4 billion, a 29% year-over-year increase; Shell's adjusted earnings reached $6.92 billion, up 23% from last year; BP's net profit hit $3.2 billion, more than doubling from the same period in 2025, reflecting the success of trading activities.
- Market Competitive Advantage: The top three European oil majors excel in establishing large trading units, particularly in high-volatility markets, allowing them to capitalize on trading opportunities and gain a competitive advantage over U.S. peers amid valuation gaps.
- Risks and Rewards: While trading desks have generated substantial short-term profits, analysts caution that over-reliance on trading could lead to cash management challenges, and in calmer markets, trading profits may take a backseat to core business revenues.
See More
Middle East Conflict Causes Global Oil Shortage
- Global Oil Shortage: Shell CEO Wael Sawan reports a global oil shortage of 1 billion barrels due to geopolitical conflicts in the Middle East, with recovery expected to take months, leading to sustained high energy prices that will impact the global market.
- Rising Energy Prices: Elevated oil prices will benefit integrated energy giants like Shell, ExxonMobil, and Chevron, with Chevron's 3.9% dividend yield surpassing both Shell and Exxon, demonstrating its stability throughout the energy cycle.
- Opportunities in U.S. Upstream Companies: Companies like Diamondback Energy and Devon Energy, focused solely on oil and gas production, estimate free cash flow yields of 15% at $90 per barrel oil, with Devon projecting a yield of 21% at $110 per barrel, highlighting their potential profitability.
- Market Volatility: While the Middle East conflict raises concerns, the inherent volatility of energy markets remains unchanged, prompting investors to choose strategies based on risk tolerance, with long-term investors favoring Chevron and short-term traders considering Diamondback and Devon Energy.
See More
