Exxon Mobil and Chevron Profits Drop Amid Iran Conflict Despite Oil Price Surge

Exxon Mobil and Chevron reported significant declines in their first-quarter profits compared to last year, despite a sharp rise in oil prices triggered by the ongoing conflict involving Iran. The war has caused the largest disruption in oil supply in history, yet the companies faced financial setbacks due to unfavorable timing of hedging trades.

This earnings report highlights the complex impact of geopolitical events on the energy sector, showing that soaring oil prices do not always translate into immediate financial gains for oil producers. The temporary challenges faced by these oil majors underscore the volatility and risks in global energy markets amid geopolitical instability.

Profits Plunge Despite Oil Price Surge

In the first quarter of 2026, Exxon Mobil's net income fell by 45% to $4.2 billion, while Chevron's profits dropped 36% to $2.2 billion. This decline occurred even as oil prices surged 57% following the U.S. and Israel's attack on Iran on February 28, which severely disrupted global oil supplies.

Both companies managed to beat Wall Street's earnings expectations, with Exxon posting adjusted earnings of $1.16 per share and Chevron $1.41 per share. However, the revenue figures showed mixed results, with Exxon exceeding estimates and Chevron falling short.

Impact of Financial Hedges and Timing Effects

Exxon Mobil faced nearly $4 billion in losses due to financial hedges that were negatively affected by the timing of product deliveries amid the conflict. These hedges, which were intended to manage price risks, did not align with the sudden supply disruptions, causing temporary financial setbacks.

Chevron also recorded a $2.9 billion charge related to its financial hedges. Despite these charges, Chevron's adjusted earnings per share surpassed analyst estimates, marking its largest earnings beat since October 2020.

Refining and Production Segments Show Mixed Results

Exxon's refining operations were hit hard, posting a loss of $1.26 billion due to timing effects on hedges not offset by physical deliveries. Excluding these effects, refining profits more than tripled compared to the previous year. Chevron's refining segment swung to a loss of $817 million, impacted by lower margins and higher transportation costs.

On the production side, Exxon’s profits declined 15% to $5.74 billion, with a slight increase in output to 4.6 million barrels per day. Chevron’s production profits rose modestly by 4% to $3.9 billion, with a 15% increase in production to 3.9 million barrels per day.

Outlook Amid Ongoing Geopolitical Tensions

"The global energy system continues to be under extreme stress," said Chevron CEO Mike Wirth. "The world will face rising oil prices until the Strait of Hormuz is reopened."

Both Exxon and Chevron expect the negative impacts from their hedging strategies to be temporary, with profits from these trades anticipated in future quarters once deliveries are completed. The companies remain cautious as the conflict continues to disrupt oil shipments, keeping energy markets volatile.