Exxon Mobil and Chevron Navigate War-Driven Market Turbulence in Q1 2026

In late February 2026 the United States and Israel launched attacks on Iran, prompting Iran to close the Strait of Hormuz. The strait carries roughly 20 percent of global oil shipments, and its near-total shutdown created the largest oil-supply disruption in modern history. Crude and gasoline prices spiked, yet the two largest U.S. oil producers reported sharply lower quarterly profits because the physical delivery of oil—required to realize gains from pre-set hedges—was blocked.

Associated Press

The closure halted the flow of oil and natural-gas cargoes that were already en route. Analysts noted “a lot of water and a lot of oil in transit on the water, a lot of inventory on the water.” With shipments stalled, companies could not offset their hedging contracts, producing a “timing effect” loss. The disruption also forced airlines to cancel flights and pushed U.S. gasoline prices to a multiyear high of $4.39 per gallon, intensifying inflation pressures.

Associated Press

• Exxon Mobil: Net income fell 45 percent to $4.18 billion; adjusted earnings were $1.16 per share, beating the $1.00 consensus. Revenue reached $85.14 billion, above the $82.18 billion forecast. Production slipped to 4.6 million boe/d from 5.0 million boe/d. The company reported a $4 billion hedge loss, describing it as a “temporary timing effect.”

CNBC

• Chevron: Net profit dropped 36 percent to $2.21 billion; adjusted earnings were $1.41 per share versus the $0.95 expected. Revenue was $48.61 billion, a figure reported as both above and below analyst expectations (see Conflicting Reports). A $360 million legal-reserve loss and $223 million foreign-currency hit further reduced earnings.

Associated Press

• Production Impact: Exxon estimated that about 15 percent of its output is affected by the war and warned that Middle-East production could fall by 750,000 bpd in Q2 if the strait remains closed. The company expects a two-month ramp-up once the waterway reopens, plus an additional month for shipments to reach customers.

CNBC

Exxon’s CEO Darren Woods emphasized that the hedge loss is deferred, not permanent, and that future quarters will capture the profit once deliveries occur. He also noted the company’s effort to redeploy roughly 13 million barrels to markets with the greatest demand, despite the accounting hit. Chevron’s earnings release highlighted the one-time legal-reserve charge and foreign-currency effects but did not attribute the profit decline to the strait closure directly.

CNBC

• Chevron revenue: AP News reported the $48.61 billion figure as “better than expected,” while CNBC described it as missing a $52.1 billion consensus. The source discrepancy is not resolved in the available data.

CNBC

• Quantitative details: Exact volumes of oil held in transit and the precise timeline for strait reopening remain unspecified.

Associated Press

• “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,” — Darren Woods, CEO, Exxon Mobil

Associated Press

• “The impact is temporary and the hedges will result in a net profit in subsequent quarters after the products are delivered, Exxon said.” — Exxon Mobil spokesperson

CNBC

• “Exxon said its Middle East production will fall by 750,000 barrels per day compared with 2025 if the Strait of Hormuz is closed for the entire second quarter.” — Exxon Mobil statement

CNBC

The supply shock has translated into record gasoline prices, heightened inflation, and operational strain for fuel-intensive sectors such as airlines. Although the oil majors beat earnings forecasts, the accounting losses underscore how geopolitical events can distort short-term financial performance even when underlying demand remains robust.

Associated Press

Exxon projects a two-month period to restore full oil flows after the strait reopens, with an additional month for shipments to reach end users. Both companies expect the deferred hedge gains to materialize in subsequent quarters, contingent on the resolution of the Iran conflict and the restoration of uninterrupted maritime transport.

Associated Press