Exxon and Chevron Q1 earnings fall as Iran war disrupts oil supply
Both companies signal stronger profits ahead after U.S.-Israel attack on Iran sent oil prices sharply higher late in the quarter.
Briefing
- •ExxonMobil and Chevron both reported lower first-quarter 2026 earnings, weighed down by depressed oil prices through the first two months of the year.
- •Oil prices were subdued in January and February before spiking sharply after the U.S. And Israel attacked Iran on February 28.
- •The Iran conflict also disrupted oil shipments, hitting output volumes for both companies during the quarter.
- •Chevron beat analyst estimates despite the earnings decline, according to Bloomberg, suggesting the late-quarter price surge provided a partial offset.
- •Forward earnings for both companies are expected to rise materially given oil prices remain elevated following the Iran strike.
Analysis
- →With Q1 earnings already depressed by subdued January-February oil prices and supply disruptions from the Iran strike, the forward earnings recovery for XOM and CVX is now entirely contingent on elevated oil prices holding through Q2 and beyond. If the Iran risk premium compresses on any ceasefire or diplomatic signal, the forward earnings uplift management and consensus are pricing in reverses quickly, leaving both stocks exposed to a multiple de-rating on reduced forward estimates.
- →The Iran strike's simultaneous impact on oil supply volumes and prices creates a bifurcated read for energy sector positioning: integrated majors like XOM and CVX face volume headwinds from disrupted shipments even as the price spike partially offsets them, while pure upstream producers with Middle East exposure face a harder volume impairment without the same downstream or trading offset that Chevron's beat implies existed in Q1.
Historical Context
- 2019-2020
The U.S. killing of Qasem Soleimani in January 2020 caused a brief oil price spike that faded within days as supply disruption fears proved overstated. Integrated majors that had priced in sustained elevated prices gave back gains quickly, a precedent directly relevant to whether XOM and CVX's forward earnings uplift is durable.
- 1980
The Iran-Iraq War disrupted Iranian and Iraqi oil exports simultaneously, generating a prolonged supply shock that materially lifted integrated major earnings for multiple quarters. The current Iran conflict's duration and escalation path will determine whether this episode resembles the brief 2020 spike or the sustained 1980s supply impairment.
Connected Events
UBS Q1 net profit jumps 80% to $3bn on investment-banking surge
UBS reported that its Q1 investment banking and trading revenue surged materially, with management attributing part of the volatility windfall to the Iran war and tariff uncertainty. This confirms the Iran strike generated cross-asset volatility that benefited trading desks while simultaneously impairing oil supply volumes for XOM and CVX.
Zuckerberg links Meta's 8,000 layoffs to AI capital costs, warns more cuts possible
Zuckerberg cited geopolitical conflict as a factor weighing on Meta's sales growth without specifying which markets were most affected. The Iran conflict creating demand disruption across multiple sectors simultaneously suggests macro-level earnings drag is broader than just energy, reinforcing a cautious forward guidance environment across Q1 reporters.