Exxon Mobil CEO expects higher oil prices due to Iran war: ‘The market hasn’t seen the full impact’
Exxon Mobil CEO Darren Woods warned that oil markets have not yet felt the full impact of the Iran war and the closure of the Strait of Hormuz, despite current prices appearing stable. He predicted future price increases as floating oil supplies and reserves are depleted and demand rises post-conflict. Exxon expects significant production and refining throughput declines, with 15% of its output affected and Middle East production down 750,000 barrels per day if the strait remains closed.
- ▪The market hasn't absorbed the full impact of the oil supply disruption from the Iran war and Strait of Hormuz closure.
- ▪Strategic reserves and floating inventories have temporarily offset supply losses but will eventually be exhausted.
- ▪Exxon's Middle East production could drop by 750,000 barrels per day and refining throughput by 3% if the strait stays closed.
- ▪About 15% of Exxon's total production has been impacted, including damage to LNG lines in Qatar.
- ▪Oil prices remain below expected levels given the scale of disruption, while Exxon's stock has remained flat despite rising oil prices.
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Exxon Mobil CEO Darren Woods warned Friday that the market has not absorbed the full impact of the unprecedented oil supply disruption triggered by the Iran war and the closure of the Strait of Hormuz. The disruption has been mitigated by the large number of loaded oil tankers that were in transit during the first month of the war, Woods told investors on Exxon's first-quarter earnings call. Strategic petroleum reserves have also been released and commercial inventories drawn down, the CEO said. One of these supply sources will become exhausted as the conflict goes on, Woods said. Oil prices will then increase as the strait remains closed, he said.
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