Exxon Mobil CEO Warns Oil Prices Will Surge as Iran Conflict’s Full Impact Looms

Exxon Mobil CEO Darren Woods cautioned investors that the global oil market has not yet absorbed the full consequences of the supply disruptions caused by the ongoing Iran war and the closure of the critical Strait of Hormuz. Despite current oil prices fluctuating, Woods emphasized that the market has so far been cushioned by oil tankers already in transit, strategic petroleum reserves, and commercial stockpiles.

This warning signals that if the Strait of Hormuz remains closed, oil prices are poised to rise significantly as these temporary buffers deplete. The disruption threatens to reduce Exxon’s Middle East production by 750,000 barrels per day and could tighten global supply, impacting energy markets and economies worldwide.

Temporary Buffers Masking True Supply Shock

Woods explained that the initial impact of the Iran war on oil supply has been softened by a large number of loaded tankers already en route when the conflict began, along with releases from strategic petroleum reserves and commercial inventories. However, these sources are finite and will eventually be exhausted if the conflict persists.

As these buffers run out, the market will face a more severe supply crunch, pushing oil prices higher. Woods stressed that the current price levels do not yet reflect the scale of the disruption in the Middle East.

Oil Price Volatility Amid Conflict Uncertainty

Since the war began, oil futures have experienced wild swings—soaring on fears of escalation and plunging on hopes for peace. On the day of Woods’ comments, U.S. crude dropped over 3% to $101.38 per barrel, while Brent crude fell about 2% to $108 per barrel.

Despite these fluctuations, Woods noted that prices remain closer to historical averages of the past decade rather than reflecting the unprecedented supply disruption currently underway.

Normalization and Rebound Timeline

Woods anticipates that oil flows from the Persian Gulf will take one to two months to normalize after the Strait of Hormuz reopens. This delay is due to the need to reposition tankers, clear supply backlogs, and allow vessels to reach their destinations.

Furthermore, governments and industry players will need to replenish strategic reserves and commercial inventories once the conflict ends, which will increase demand and likely drive prices upward.

Exxon’s Production Impact and Market Outlook

Exxon warned that if the Strait remains closed through the second quarter, its Middle East production could drop by 750,000 barrels per day compared to 2025 levels, with a 3% decline in refinery throughput globally. Approximately 15% of Exxon’s total production has been affected by the closure.

Additionally, Iranian attacks on Qatar’s liquefied natural gas export hub damaged production lines in which Exxon holds stakes, further impacting output.

"It's obvious to most that if you look at the unprecedented disruption in the world supply of oil and natural gas, the market hasn't seen the full impact of that yet. There's more to come if the strait remains closed."—Darren Woods, Exxon Mobil CEO

Looking Ahead: What to Expect

The ongoing conflict and closure of the Strait of Hormuz pose significant risks to global energy markets. As temporary supply cushions deplete, oil prices are expected to climb, potentially straining economies dependent on stable energy costs.

Investors and policymakers will be closely monitoring developments, with the timing of the strait’s reopening and the conflict’s resolution critical to market stability in the coming months.