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Tuesday, 23 October, 2001, 16:21 GMT 17:21 UK
Exxon's profits tumble
Esso petrol station
Demand for petrol has dropped since the US attacks
Profits at ExxonMobil, the world's biggest oil company, have fallen 23%.

The news brings the firm's recent run of reporting ever-increasing profits to an abrupt end.

Last year, the company made $17.7bn, more money than any US corporation in history.

It is the first decline in quarterly profits since the giant was formed in November 1999 through Exxon's purchase of Mobil.

The profits of energy firms are extremely dependent on the prices of oil, natural gas and electricity.

Opec's broken promise

Profits at the Texas-based company fell to $3.32bn in the three months to the end of September, down from $4.29bn in the same period a year earlier.

The group's chairman, Lee Raymond, said results were hurt by an "adverse economic and commodity price environment".

The global economic slowdown has curbed demand for fuel, while the 11 September terrorist attacks have slashed demand for jet fuel.

The company also blames the oil cartel Opec for producing more oil than it promised and sending crude prices lower. However, speculation remains that Opec will cut production at its next meeting in November.

Safe haven?

Profits at the firm's exploration and production business, which depend most heavily on the wholesale crude oil price, fell over 30% to $2.13bn.

And with many market observers saying that Opec has now lost its grip on price controls, analysts are predicting crude oil prices to fall further.

But while the oil companies may see their profits fall, the energy sector is holding up far better than many other companies affected by the economic downturn.

And industry heavyweights such as ExxonMobil are often a safe haven for investors who fear that smaller companies are more vulnerable to bankruptcy.

Dr Takin, Centre for Global Energy Studies
"I think an [Opec] cut is more likely"
Kyle Cooper, Saloman Smith Barney
"It is really the Russians and the former Soviet Union states that have increased production"
See also:

20 Feb 01 | Business
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24 Jul 01 | Business
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Exxon Mobil reaps record profits
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Exxon Mobil reaps $5bn
12 Mar 01 | Business
ExxonMobil closes Indonesian fields
04 May 01 | Business
Exxon fined $3.4bn for 'fraud'
08 May 01 | Business
Consumer boycott to 'stop Esso'
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