Exxon Mobil and Chevron reported drops in profit in their first quarter despite surging oil prices, a result of stalled deliveries and supply disruptions in the Middle East.
Exxon’s quarterly earnings fell to $4.2bn from about $7.7bn the same quarter last year, a decline of about 46%, while Chevron’s profits fell to $2.2bn from about $3.5bn, down about 37%. Still, both companies beat Wall Street expectations.
America’s two largest oil giants are still expected to eventually reap the benefits of soaring oil prices, which reached levels unseen since 2022 this week as the war in Iran continues.
In a prepared statement, Exxon said that “timing effects” and volume impacts in the Middle East reduced reported earnings; when excluding those effects, the company reported $8.8bn in profit. At Chevron, unfavorable timing effects totaled about $3bn for the quarter, according to the company.
“One of the things that we called out in our press release was the timing,” Darren Woods, Exxon’s chairman and chief executive officer, said in an interview with CNBC on Friday morning. “As you close the quarter in the volatile market, you book the hedges, the paper, but the physical barrels are in inventory until they get delivered. So you get this deferred profit that we wanted to basically highlight, and make sure that our investors understood that the work that we’re actually doing to meet the demands today are resulting in benefit not necessarily booked in the quarter.”
At the start of the war, Donald Trump declared on Truth Social that: “The United States is the largest Oil Producer in the World, by far, so when oil prices go up, we make a lot of money.”
Certain oil and gas companies are already reaping the benefits. BP announced that its profits more than doubled in the last quarter, crediting “exceptional oil trading” for its highest quarterly profit since 2023 – an announcement that led advocacy groups and some European finance ministers to call for greater taxes on windfall profits.
Other earnings reports indicate that it may take longer for oil companies to report clear gains. ConocoPhillips, a partner in Qatar’s state gas company, cut its forecast annual output due to disruptions in Qatar’s liquified natural gas operations caused by the war. Iranian attacks on QatarEnergy LNG’s export plant will take years to repair, state energy officials have said. Chevron and Exxon’s stock jumped at the start of the war but eased in April as the US and Iran agreed on a ceasefire and the reopening of the strait of Hormuz. And Lockheed Martin, a key defense contractor with the federal government, initially saw its stock jump 25% since the start of the year, but has since dropped to roughly the same levels.
Meanwhile, gas prices as the pump continue to climb, with the current average reaching $4.39, up from $3.187 a year ago. Americans are also facing fears of elevated inflation and slow job growth amid turmoil in the Middle East.
