ExxonMobil and Chevron earnings fall, but bigger profits are on their way because of soaring oil prices

By Chris Isidore, CNN

(CNN) — ExxonMobil and Chevron, America’s two largest oil companies, both reported a sharp drop in profit for the first three months of this year. But much bigger profits likely lay ahead because of rising oil prices during the war with Iran.

Oil and gas prices rose in the runup to the Iran war and surged after the war started on February 28. Big Oil companies like Exxon and Chevron tend to become more profitable when oil prices rise.

The companies said their quarterly results were hurt by financial derivatives trades that fell in value because oil prices spiked before that oil could be delivered.

ExxonMobil reported net income of $4.2 billion, down 46% from a year earlier, while Chevron’s $2.2 billion net profit was down 37%. But both companies reported results that were well above Wall Street forecasts for the period.

Analysts expect both companies’ profits to soar the rest of the year. Ahead of the companies’ early Friday earnings reports, the consensus estimate from analysts was for ExxonMobil’s second-quarter earnings to more than double from a year ago and for full-year earnings to climb 46%. Chevron profits are expected to more than triple in the current quarter and increase 56% for the year.

That would give the companies their best year since 2022, when the war in Ukraine drove the average US gas price to a record $5.02 a gallon.

The current average US gas price stood Friday at $4.39, up 39 cents in just the last 9 days and up 47% since the start of the war in Iran.

Neither ExxonMobil nor Chevron lost significant amounts of oil production after Iran closed the Strait of Hormuz, trapping 20% of the world’s output during the year. They produce most of their oil in the United States or elsewhere in the world outside the Middle East. But the closing of the strait has roiled global energy markets, which set the price of oil futures higher.

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