Imperial Oil Ltd. (TSX:IMO) climbed C$9.86 to close at an all-time high of C$193.48 on Friday, October 30, after its third-quarter profit beat analyst expectations.

Rising crude prices added fuel. Oil pushed above US$100 a barrel after a tanker attack in the Strait of Hormuz, making energy one of the few bright spots on a rough day for the S&P/TSX Composite.

What happened

Imperial reported Net Income of C$2.45 billion, or C$5.11 per diluted share, for the quarter ended September 30. That was well ahead of the C$4.70 per share analysts expected on average.

A year earlier, the company earned C$539 million, or C$1.07 per share. Revenue rose to C$16.21 billion from C$12.05 billion.

The stock did not rise in a straight line. Imperial shares edged lower early in the session despite the beat. They gained ground as the day went on and closed among the index's top performers.

U.S. crude futures settled at about US$104.12 a barrel, up on the day. Energy rose while the broader index fell about 629 points to 35,620.03.

Why it matters

The biggest driver of the beat was refining. Downstream Earnings jumped to C$1.56 billion from C$444 million a year earlier, helped by improved refining margins and a more favourable product mix.

Disruptions linked to the Iran war, including problems with energy exports through the Strait of Hormuz, have tightened global fuel supplies. That pushed up prices for diesel, gasoline and jet fuel faster than crude, widening the margins that refiners earn.

Imperial, which is majority-owned by ExxonMobil, is also returning a lot of cash to shareholders. It bought back about C$2.09 billion of its own shares in the quarter, paid C$420 million in dividends and declared a fourth-quarter Dividend of 87 cents per share. Chief executive John Whelan said in the release: "We're on pace to complete our NCIB by year end."

The bigger picture

Not every number was strong. Upstream production fell to 418,000 gross oil-equivalent barrels per day from 462,000 a year earlier. Lower output at Kearl, planned maintenance at Cold Lake and Syncrude, and a third-party pipeline outage all weighed. Refinery throughput also slipped to 381,000 barrels per day.

Whelan called the outages "one-offs" rather than signs of deeper problems.

He was also upbeat about Pathways, the oilsands carbon capture project tied to a proposed pipeline. He said he remains "really encouraged about where we are" ahead of a November 15 target for binding agreements with Ottawa and Alberta.

Friday's rally stood out against a weak market. The S&P/TSX Composite had its steepest drop since June as gold miners and technology stocks sold off, and decliners outnumbered advancers 661 to 339. Banks also slipped after the Bank of Canada raised interest rates on Wednesday.

What to watch next

Oil prices and tensions in the Middle East will stay front and centre. Any further disruption around the Strait of Hormuz could keep crude and refining margins high, while a de-escalation could cool both.

Investors will watch whether Kearl and the refineries return to normal rates in the fourth quarter, and whether Imperial finishes its buyback program by year end as planned. Updates on Kearl volumes will be a key test of Whelan's view that the quarter's problems were temporary.

The November 15 Pathways deadline is another near-term marker for the stock and the wider oilsands sector.