War's Oil Surge: Exxon May Gain Billions

Exxon Mobil has indicated that the ongoing U.S.-Israeli conflict impacting Iran could lead to a substantial increase in its first-quarter upstream earnings, potentially reaching $2.9 billion. This surge is attributed to the rise in oil and gas prices resulting from the hostilities and disruptions in the Middle East. The conflict, which began on February 28, caused oil prices to climb significantly, with some production fields ceasing operations after the closure of the Strait of Hormuz.

Conversely, Exxon's downstream earnings might see a negative impact of approximately $5.3 billion. This is partly due to timing effects related to accounting rules for its trading program, as highlighted by Chief Financial Officer Neil Hansen. He clarified that these impacts are temporary and are expected to resolve in later quarters as shipments are completed and underlying transactions finalize.

The company also reported that its first-quarter oil and gas production would be 6% lower than the previous quarter, with specific assets in Qatar and the UAE being significant contributors to its global output. Exxon plans to release its full first-quarter results on May 1, providing investors with a detailed look at the market factors influencing its performance.