Chevron has announced plans to reduce its global workforce by up to 20% by the end of 2026. This decision is part of a broader strategy aimed at cutting costs, simplifying its operations, and fostering growth for the oil giant.
According to Vice-chair Mark Nelson, the company aims to optimize its extensive portfolio, leverage technology for better productivity, and rethink how work is conducted. He stated, “We expect these actions to result in workforce reductions of 15 to 20 percent, starting in 2025 and mostly completed by the end of 2026.”
These deep cost-cutting measures come even as President Trump urges oil producers to ramp up production to drive down energy prices. Chevron initially hinted at these changes back in November, with a goal of achieving $2 billion to $3 billion in savings through various methods including asset sales and improved workflows. Recently, the company also moved its headquarters from San Ramon, California, to Houston, Texas.
As of the end of 2023, Chevron employed around 46,000 people, including those working at gas stations. The announcement of workforce cuts follows underwhelming fourth-quarter results, which revealed weaker margins in its refining sector. The company posted adjusted earnings of $2.06 per share, falling short of Wall Street’s expectations of $2.11.
In a call discussing the results, CEO Mike Wirth described the situation as a quarter with multiple challenges that negatively impacted results. Oil analyst Paul Sankey noted that while the job cuts were unexpected, they represent a proactive decision rather than a reaction to an immediate crisis. He added that Chevron is not in a hurry to increase oil output, having already advanced two major projects in the Permian Basin in the U.S. and at Tengiz in Kazakhstan.
Sankey also pointed out that Chevron is looking to benefit from its $53 billion acquisition of Hess, a U.S. company with operations in Guyana. However, the closing of this deal is delayed due to arbitration proceedings initiated by ExxonMobil.
Following the announcement of these job cuts, Chevron’s stock saw a decline of 1.6%. Analysts indicate that the oil sector is currently adjusting after experiencing substantial profits in the last couple of years, driven in part by rising prices post-Russia’s invasion of Ukraine. Brent crude prices are projected to average $74 per barrel in 2025 and $66 per barrel in 2026, a decrease from $81 last year.
In a similar vein, ExxonMobil has reaffirmed its target of attaining $18 billion in savings by the end of 2030 compared to 2019 levels.