Exxon Mobil CEO Darren Woods has warned that crude oil and fuel prices could escalate further if the Strait of Hormuz remains blockaded due to the ongoing conflict in Iran. This prediction comes as both Exxon and Chevron reported first-quarter earnings that exceeded market expectations, despite significant year-over-year profit declines.
Disruptions and Market Impact
Woods highlighted the unprecedented disruption to global oil and liquefied natural gas (LNG) flows caused by the war, stating that the market has yet to fully absorb the impact. "If you look at the unprecedented disruption in the world’s supply of oil and natural gas, the market hasn’t seen the full impact of that yet," Woods said. "So there’s more to come if the strait remains closed."
"It’s early to have firm conclusions about how the energy system will change in the long term. I do think there will be changes," Chevron CEO Mike Wirth said.
Strategic Adjustments
Both Exxon and Chevron are refraining from increasing spending plans and drilling activities beyond current levels, despite calls from the White House to boost production. Instead, they are focusing on maximizing refinery and petrochemical plant utilization, including delaying planned maintenance, to capitalize on global supply shortages.
Regional Operations
Exxon’s refining and petrochemical operations in Saudi Arabia, as well as LNG production in Qatar, continue to face disruptions. Similarly, Chevron’s oil production in Saudi Arabia and Kuwait remains affected, though its offshore natural gas production near Israel has resumed normal operations. Exxon reported a $4.18 billion quarterly profit, down 46% year-over-year, while Chevron posted a $2.21 billion profit, down 37% year-over-year.
Woods emphasized the uncertainty surrounding long-term energy market changes, particularly regarding Iran’s control over the Strait of Hormuz and the potential for sustained price increases once normal flows resume.