Exxon, Chevron profits take hit from Iran war, 'more to come' if Strait of Hormuz remains closed

Ines FerréFri, May 1, 2026 at 3:08 PM UTC

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What happened: ExxonMobil (XOM) and Chevron (CVX) both saw Q1 earnings per share drop from the same quarter last year on mistimed oil price hedges affected by the war in Middle East blocking major swaths of global energy flows.

Exxon CEO Darren Woods also said on an earnings call with analysts and investors that the market has “more to come” of negative impacts if the Strait of Hormuz remains closed, and that renormalization of oil flows after the Strait is reopened would likely take at least 1-2 months.

What else you should know: Exxon’s first-quarter adjusted earnings per share of $1.16 fell below first-quarter 2025 earnings of $1.76. At Chevron, first-quarter earnings of $1.41 fell below EPS of $2.18 a year ago.

Both companies are looking at steep paper losses from derivatives positions opened at the beginning of the year, when oil prices were low.

Energy companies use financial instruments to hedge oil prices and protect themselves from pricing volatility. Typically, Exxon and Chevron would be able to offset losses on the hedging contracts with gains tied to the underlying physical barrels.

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However, the companies can’t book gains on the physical barrels until they are actually delivered and must mark the financial hedges to their current value at the end of the period, even if they may be profitable once the underlying physical barrels can be delivered.

Exxon disclosed Friday that it lost roughly $4 billion in the quarter on the “unfavorable estimated timing effects” of its derivative hedges. Chevron disclosed timing effect losses of $2.9 billion.

Ines Ferre is a senior business reporter for Yahoo Finance. Follow her on X at @ines_ferre.

Jake Conley is a breaking news reporter covering US equities for Yahoo Finance. Follow him on X at @byjakeconley or email him at jake.conley@yahooinc.com.

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Source: “AOL Money”