TotalEnergies flags stronger Q2 profit on refining and trading
TotalEnergies expects a second-quarter profit boost driven by robust refining margins and oil trading, signaling a market split where tight fuel markets overshadow softening European gas demand.
TotalEnergies has signaled a significant increase in second-quarter cash flow and profits, driven primarily by a sharp uptick in downstream operations as fuel markets tighten following the outbreak of the Iran war. The French energy major will report its full quarterly results on July 23.
“Downstream results and cash flow are expected to increase sharply compared to the first quarter of 2026, supported by higher refining and petrochemical margins, as well as oil trading results, which are expected to remain at the same strong level as in the first quarter,” the company said on Thursday. This downstream strength forms the core of the anticipated earnings improvement.
This guidance aligns TotalEnergies with industry peers Shell and BP, both of which recently flagged strong second-quarter performances in their refining and oil trading divisions. For investors, the trend underscores how geopolitical disruptions are translating into lucrative processing margins for integrated energy companies.
Upstream operations are also contributing positively, with the Exploration & Production division expected to generate roughly $1 billion more in cash flow than in the prior quarter. The company mitigated regional disruptions by ramping up offshore output in the United Arab Emirates and restarting production in other affected countries during June.
Consequently, TotalEnergies lowered its estimated impact of the Middle East conflict on second-quarter output to approximately 210,000 barrels of oil equivalent per day. This marks a notable recovery from the 360,000 boe/d deficit it projected last quarter.
“A significant portion of this production could not be lifted during the quarter and is recognized in Exploration & Production results based on the crude price from end-June (less than $70/b),” the supermajor noted. While upstream earnings will still rise, they will be constrained by this accounting reality.
The quarter's primary drag comes from the integrated liquefied natural gas division, where cash flow and results are expected to fall significantly. “This is affected by an underperformance in gas trading activities amid a broadly flat to declining European market, after outperforming in the first quarter,” TotalEnergies explained.
The divergence between the company's oil and gas trading performance highlights a shifting commodity landscape. While oil markets experience immediate pricing pressure from supply constraints, European gas markets are currently characterized by ample supply and weak demand.
