Exxon Mobil reported a 6% decline in its oil production during the first quarter of this year, attributed to disruptions linked to the escalating conflict in the Middle East. This information was disclosed in an official statement submitted by the company to the U.S. Securities and Exchange Commission.
The conflict, which began with a U.S.-Israeli attack on Iran on February 28, has caused oil prices to exceed $100 per barrel in recent weeks, significantly impacting natural gas prices in some markets.
Details of the Event
Despite a sharp drop in crude oil prices on Wednesday following the announcement of a ceasefire by both parties, experts predict that the rise in commodity prices will generally support the profits of oil companies. Exxon Mobil clarified that the sudden increase in commodity prices often has a negative impact on profits due to the way oil inventories are valued according to U.S. accounting standards, noting that this effect will diminish over time.
The company excluded these accounting effects from its forecasts, expecting earnings per share to be higher than in the last quarter of 2025. It also indicated that disruptions in facilities in Qatar and the UAE would lead to a global oil equivalent production decline of approximately 6% in the first quarter compared to the last quarter of 2025. The attacks targeted two natural gas liquefaction units in Qatar, in which Exxon Mobil holds a stake, explaining that repairs would take a long time.
Background & Context
Exxon Mobil also anticipates a 2% decrease in its global energy product output due to the disturbances in the Middle East, according to the French press agency. Conversely, the company plans to increase its production in the Permian Basin, rich in oil shale in Texas and New Mexico, to 1.8 million barrels of oil equivalent per day by 2026, compared to 1.6 million barrels per day in 2025.
Exxon Mobil also recorded its first production at the Golden Pass liquefied natural gas project in partnership with QatarEnergy in Port Arthur, Texas, reflecting its commitment to increasing global supplies.
Impact & Consequences
Exxon Mobil's shares fell by 4.7% amid a decline in shares of other oil production companies. Most Gulf stock markets also dropped at the beginning of trading on Thursday, as pressures increased on the fragile regional ceasefire, raising investor concerns about ongoing geopolitical and inflationary risks.
Questions arose regarding the durability of the ceasefire on Wednesday, as Israel continued its strikes on Lebanon, while Iran stated that it was unreasonable to proceed with talks for a permanent peace agreement. Both Israel and the United States confirmed that the two-week ceasefire does not include Lebanon, while Israeli Prime Minister Benjamin Netanyahu stated that strikes would continue.
Regional Significance
The tense situation in the region continues to impact financial markets, with the main index of the Saudi market declining by 0.2%, affected by a drop in shares of the country's largest bank, the National Commercial Bank. Conversely, shares of Saudi Aramco rose by 0.2%, reflecting a divergence in performance among major companies.
Market indices in Dubai and Abu Dhabi also fell, with the main index of the Dubai Financial Market dropping by 1.3%, while the index in Abu Dhabi decreased by 0.4%. The Qatari index also fell by 0.5%, with shares of Industries Qatar declining.
Oil prices remain elevated by approximately 40% compared to pre-conflict levels, raising concerns about the potential reflection of these increases on inflation in upcoming economic data. Investors are looking forward to the release of personal consumption expenditure data in the United States for more insights into inflation trends.