Exxon Mobil expects lower profit despite higher oil prices

EXXON MOBIL CORP has signaled that its first-quarter earnings for 2026 are expected to decline from the previous quarter, despite a surge in revenue driven by rising energy prices. The top producer in the United States faces a multi-billion dollar impact from financial hedging and timing effects linked to the conflict involving Iran.

In a recent regulatory filing, the company indicated that upstream earnings could benefit from a $1.4 billion lift due to higher oil prices, which jumped by as much as 65% following the start of the war on February 28. Conversely, downstream results are projected to take a $5.3 billion hit from timing effects related to derivative contracts and cargoes that remained undelivered because of the hostilities. RBC Capital Markets analyst Biraj Borkhataria described the update as a complex release influenced by specific geopolitical factors.

This is clearly a messy release with a number of Exxon-specific factors related to current events in the Middle East impacting earnings, Borkhataria noted.

Market estimates now point to first-quarter earnings of approximately $5 billion, or $1.20 per share, compared to adjusted earnings of $7.3 billion, or $1.71 per share, in the fourth quarter. Exxon Mobil Corp Chief Financial Officer Neil Hansen stated that the large negative timing impact is temporary and stems from accounting rules governing the company’s trading program. Like many peers, the firm hedges sales of crude, natural gas, and refined products to manage price volatility during the weeks-long transit of cargoes.

These impacts will unwind over time and result in net-positive profit once the underlying transactions are complete.

Hansen further noted that the company expects to record an impairment between $600 million and $800 million as supply disruptions prevented the physical shipment of certain hedged cargoes. Oil and gas production for the first quarter is expected to be 6% lower than the 5 million barrels of oil equivalent per day recorded in the previous quarter. Production assets in Qatar and the United Arab Emirates accounted for 20% of the company's global output in 2025.

The ongoing war has caused massive disruptions to global energy supplies, particularly with the effective closure of the Strait of Hormuz, a conduit for a fifth of global energy flows. During the first quarter, Brent Crude Oil prices averaged $78.38 per barrel, a 24% increase from the prior three months. Exxon is scheduled to report its full financial results on May 1.