Exxon Mobil signaled that its second-quarter earnings could see a boost of about $5 billion compared to the previous quarter, as oil prices spiked during the U.S.-Israeli war with Iran and the company’s refining margins also improved, according to a regulatory filing released Tuesday. The signal provides an early window into how energy giants will perform when they report results, and XOM stock has already responded to the earnings outlook.
Benchmark Brent crude had an average closing price of $96.68 per barrel during the April-June quarter, up 23% from the first three months of the year, according to Reuters. Prices climbed to $109.27 a barrel in April for the first time since 2022.
The conflict in the Middle East that began in February injected a hefty geopolitical risk premium into oil markets. For months, it virtually shut down the Strait of Hormuz, which carries about a fifth of global oil flows, according to the Reuters Power Up newsletter. This disruption to one of the world’s most critical energy chokepoints drove the dramatic surge in crude prices.
How the Earnings Boost Breaks Down
Exxon’s upstream segment—its exploration and production business—could see profits lifted by about $1.6 billion from the higher oil prices, according to the midpoint of estimates provided by the company. Earnings from refining could see a lift of about $2.6 billion due to so-called timing effects, the company disclosed in its regulatory filing.
The refining boost stems from financial hedging positions that Exxon took a multi-billion dollar hit on in the first quarter. The company said at the time that those positions would unwind and lead to profitability in subsequent quarters, which is now materializing in Q2. However, disruptions due to the war could hurt second-quarter profit across the upstream and downstream units by about $1 billion, partially offsetting the gains.
Analysts expect Exxon to report $15.7 billion in adjusted earnings for the quarter, according to consensus estimates compiled by LSEG, about triple first-quarter earnings. The company will report second-quarter results on July 31.
A Precedent from 2022
The current earnings surge mirrors what occurred in 2022 when oil majors posted record profits following Russia’s invasion of Ukraine. ExxonMobil earned nearly $56 billion in profit for the full year 2022, setting an annual record not just for itself but for any U.S. or European oil giant, according to WLRN reporting. In the third quarter of 2022 alone, oil companies reported record-high profits as oil prices surged above $100 per barrel. Analysts now expect big oil’s second-quarter 2026 earnings to be the strongest since 2022, according to Reuters reporting from July 3.
The earnings outlook could raise eyebrows among Americans feeling pain at the pump. U.S. President Donald Trump has pressed oil companies to do more to lower gasoline prices, according to Reuters. The tension between record corporate profits and consumer fuel costs remains a flashpoint in energy policy discussions.
Sources
- Reuters — Exxon’s Q2 earnings signal, oil price impacts on upstream and refining, analyst consensus estimates, Trump’s pressure on oil prices
- WLRN — ExxonMobil’s 2022 record earnings and comparison to 2022 oil price surge
- OilPrice.com — Big oil earnings comparison to 2022
