Exxon posted adjusted first-quarter earnings of $1.16 a share, topping the $1.00 LSEG consensus even as reported net income slid to $4.2 billion. The company said undelivered cargoes tied to the U.S.-Israeli war on Iran, plus timing losses from financial hedges, cut into reported profit. Still, higher crude prices and added output from the Permian Basin and Guyana helped offset production setbacks in the Middle East. The results show how price gains and stronger volumes at core assets have partially cushioned a direct operational shock.
Earnings and the Iran conflict hit
Exxon reported adjusted earnings of $1.16 per share for the first quarter. That topped the $1.00 consensus compiled by LSEG. The company excluded a $700 million loss tied to cargoes it couldn't deliver because of the U.S.-Israeli war on Iran. When the company also set aside the effects of its financial derivatives, reported earnings rose to $2.09 per share.
Net income for the quarter was $4.2 billion. That's down from $7.7 billion in the same period in 2025. Exxon said the $4.2 billion figure was its lowest quarterly profit since the first quarter of 2021. The company pointed to disrupted shipments and timing items as the main drags on the headline number.
How timing and hedges shaped results
Exxon uses financial derivatives to limit the price risk that appears while oil cargoes move to customers. The company said the value of the physical shipment isn't booked in earnings until the sale completes. That creates a timing effect when market prices move between sale and delivery.
Executives disclosed a multi-billion-dollar timing hit this quarter. They said they expect much of that to reverse in later quarters.
Neil Hansen, Exxon chief financial officer, said, "In general, it takes a few months for that to unwind." He added that predicting future timing effects depends on how commodity prices change.
The company also flagged cargoes that couldn't be delivered because of war-related disruptions. Exxon put the direct accounting loss from those undelivered cargoes at $700 million in the quarter. Those losses are separate from the derivative timing items and are tied to the physical inability to complete deliveries.
Production and price support
Higher crude prices since late February helped the company, the filing showed. Exxon said additional output from its major assets in the Permian Basin and Guyana offset some of the production lost in the Middle East. The company reported that disruptions tied to the conflict lowered first-quarter production by 6% versus the prior three months.
About one in five barrels Exxon produces come from the Middle East, the company said. That gives Exxon among the highest regional exposures among its U.S. Peers. For comparison, Chevron disclosed that less than 5% of its production comes from the Middle East. The differing footprints help explain why the conflict has hit majors unevenly.
Where revenue and cash flow came from
The adjusted earnings beat relied on a mix of higher prices and stronger upstream volumes. Exxon said core asset performance carried the day even as the headline profit was trimmed by the derivatives timing and undelivered cargoes. The company emphasized that, excluding timing effects and the cargo losses, net income rose year over year.
Executives noted that the underlying business remains resilient. Darren Woods, Exxon chief executive officer, said the company is stronger than it was a few years ago. He also said that recent events in the Middle East have tested that strength and that the safety of Exxon employees remains the company's top priority.
The war in the Middle East has lifted oil prices. But the boost hasn't translated into uniform profits across oil majors. Exxon reported a notable timing loss this quarter and cargo disruptions that cut into earnings. At the same time, some European peers reported gains tied to trading and other businesses. One rival cited oil trading as a driver of higher quarterly profits.
That contrast shows how different business models and regional footprints alter earnings sensitivity. Firms with larger trading operations or smaller Middle East exposure have seen a cleaner near-term benefit from higher prices. Exxon, by contrast, has been hit directly by both physical disruptions and the accounting effects of hedging activity.
Analysts and investors will focus on a few items in coming weeks. They'll watch how long the timing effects persist and how quickly undelivered cargoes can be resolved or replaced. They'll also track progress repairing any damaged Middle East assets and whether production can return to pre-disruption levels.
Exxon said it expects timing-related losses to unwind over months, not years. But the company also cautioned that the path depends on commodity-price moves. Management framed safety and asset integrity as immediate priorities while noting that production from core basins provided a buffer in the quarter.
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Exxon's adjusted Q1 earnings were $1.16 per share, above the $1.00 LSEG estimate; reported net income fell to $4.2 billion, the lowest quarterly profit since Q1 2021.
This article was created with AI assistance.
