"Excluding one-time items, ExxonMobil's earnings would have been $8.8 billion."
ExxonMobil and Chevron reported lower net income in the first quarter compared to the same period last year, despite a surge in oil prices. Both companies' results exceeded Wall Street analyst forecasts. Analysts project significant increases in earnings for the second quarter and full year.
Financial Results
ExxonMobil reported net income of $4.2 billion for the first quarter, a decrease of 46% from $7.7 billion in the first quarter of the previous year. The company cited "timing effects" and volume impacts; excluding these items, earnings were $8.8 billion.
Chevron reported net income of $2.2 billion for the first quarter, a decrease of 37% from $3.5 billion in the prior-year quarter. The company reported unfavorable timing effects of approximately $3 billion for the quarter.
Factors Cited for Declines
Both companies attributed the profit decline to financial derivatives trades losing value following oil price spikes. Exxon CEO Darren Woods stated that hedges are booked while physical barrels remain in inventory, deferring profit recognition. Stalled deliveries and supply disruptions in the Middle East also affected earnings.
"Hedges are booked while physical barrels remain in inventory, deferring profit recognition." – Exxon CEO Darren Woods
Industry and Market Context
Oil and gas prices rose before and after the start of conflict between the United States and Iran on February 28. The closure of the Strait of Hormuz, which handles approximately 20% of global oil output, affected global energy markets and oil futures prices. Neither ExxonMobil nor Chevron reported significant oil production losses from the closure, as most of their production is outside the Middle East.
BP reported doubled profits in the last quarter, citing "exceptional oil trading"—its highest since 2023. ConocoPhillips cut its annual output forecast due to disruptions in Qatar's LNG operations from the conflict. Iranian attacks on QatarEnergy LNG's export plant were reported to take years to repair.
Stock Performance
Chevron and Exxon stock rose early in the conflict but declined in April after a US-Iran ceasefire and the reopening of the Strait of Hormuz. Lockheed Martin stock initially rose 25% since the start of the year but later fell to prior levels.
Future Projections
Company Q2 Earnings Forecast (vs. prior year) Full-Year Earnings Forecast ExxonMobil More than double Increase by 46% Chevron More than triple Rise 56%If realized, these would be the companies' best annual results since 2022.
Consumer Impact
The average U.S. gas price was $4.39 per gallon—up 39 cents in just nine days.
On the Friday before publication, the average U.S. gas price was $4.39 per gallon, up 39 cents in the previous nine days and 47% higher than before the start of the Iran conflict. The price was $3.187 per gallon one year earlier. Americans faced concerns over elevated inflation and slow job growth amid Middle East turmoil.