Exxon Mobil and Chevron reported significant drops in first-quarter profits despite surging oil prices. Exxon’s quarterly earnings fell approximately 46% to $4.2 billion from $7.7 billion during the same period last year, while Chevron’s profits declined about 37% to $2.2 billion from $3.5 billion. Despite these declines, both companies beat Wall Street expectations.
The downturn was primarily caused by stalled deliveries and production outages resulting from the war in Iran and disruptions in the Middle East. Exxon's unadjusted profit fell to its lowest level in five years, and the company's CEO cautioned that these disruptions could worsen in the coming months.
To offset these losses, Exxon Mobil utilized increased production from Guyana and the Permian Basin. Chevron exceeded expectations as higher oil and natural gas prices, along with supplies from the acquisition of Hess Corp., outweighed the production outages caused by the conflict.
The first quarter saw crude and gasoline prices rocket higher after being depressed during the first two months of the year. This price spike followed attacks on Iran by the U.S. and Israel on Feb. 28. To manage the volatility of the early year, both companies had arranged hedges as a standard industry practice.