Exxon Mobil shares fall despite first quarter earnings beat expectations, CEO warns oil prices may continue to rise

Exxon Mobil exceeded expectations for adjusted earnings on Friday, supported by increased production in Guyana and the Permian Basin. However, unadjusted profits fell to a five-year low as a result of global supply chain interruptions caused by the conflict in Iran—a situation the company’s CEO warned might intensify in the coming months.

Following the announcement, Exxon shares dipped over 1% during morning trading.

At 1:26 p.m. EDT, Exxon Mobil stock was trading down by 1.23%, or $1.90, at $152.43. Year-to-date, the stock is up more than 24%.

Adjusted earnings for the first quarter reached $1.16 per share, surpassing the analyst consensus of $1.00. In contrast, net income plummeted to $4.2 billion, its lowest point since early 2021 and a significant decline from the $7.7 billion recorded in the same period last year.

While the Middle East hostilities have pushed global oil prices well beyond $100 per barrel, the financial impact on energy giants has been inconsistent. Exxon, which maintains one of the industry's highest exposure levels with approximately 20% of its production based in the Middle East, saw its output decline. Conversely, European competitors like BP and Total reported increased profits driven by their trading arms. In comparison, Chevron—the second-largest U.S. producer—noted that less than 5% of its output originates from that region.

CEO cautions oil prices may continue upward trajectory

CEO Darren Woods cautioned that energy prices could continue their upward trajectory, noting that supply disruptions have only been partially mitigated by tapping into existing inventories.

"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 told analysts on a post-earnings conference call.

He added that even if the critical Strait of Hormuz were to reopen, it would likely take one to two months for normal shipping flows to fully resume.

The company’s total worldwide production for the quarter was 4.59 million barrels of oil equivalent per day (boepd). While this was a slight year-over-year increase, it represented a nearly 8% drop from the 5 million boepd produced in the fourth quarter, primarily due to the closure of the Strait of Hormuz, which typically handles 20% of global oil and gas transit.

Exxon projected that if the waterway remains closed for the rest of the second quarter, production could slide further to between 4.1 million and 4.3 million boepd, reflecting a 750,000 bpd reduction in Middle Eastern output compared to 2025.

However, if the strait reopens immediately, second-quarter output could reach 4.7 million boepd.

The reported adjusted figures notably exclude a $700 million loss attributed to undelivered cargoes resulting from the unprecedented supply crisis that began in late February.

Woods reaffirmed that the corporation remains committed to its strategic focus on high-quality production assets.

"The conflict in the Middle East contributed to a highly volatile operating environment. Supply tightened. Logistics became more complex. Markets moved quickly. That kind of environment does not change our strategy, it proves its effectiveness," he said in prepared remarks.

During a recent conference call, Woods explained that significant time will be required to restore two damaged LNG facilities in Qatar, which represent a substantial part of Exxon’s liquefied natural gas portfolio.

The energy giant maintains stakes in these Qatari LNG sites, both of which sustained damage during Iranian military strikes.

Exxon said that these LNG trains will stay offline even after the Strait of Hormuz eventually reopens, and the company is collaborating with operator QatarEnergy to explore methods for accelerating necessary repairs.