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Exxon CEO: Iran War Means Oil Prices Haven't Peaked

Exxon Mobil CEO Darren Woods warned that the current oil market prices have not fully accounted for the severe supply disruptions stemming from the Iran conflict and the Strait of Hormuz closure. He pointed out that initial supply mitigation efforts, such as drawing down reserves, are finite. Woods projected that a continued closure would cause Exxon's Middle East production to drop by 750,000 barrels per day, impacting 15% of total output. Recovery is expected to take months due to necessary tanker repositioning. He concluded that the eventual need for governments to refill strategic reserves will create further upward price pressure on the market.

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Exxon CEO: Iran War Means Oil Prices Haven't Peaked

Exxon Mobil CEO Darren Woods warned investors that current oil market prices do not reflect the full impact of supply disruptions caused by the Iran conflict and the closure of the Strait of Hormuz. Woods stated that sustained supply issues are likely to exert upward pressure on global oil prices.

Supply Disruption Analysis

During an earnings call, Woods addressed the unprecedented disruption to global oil and natural gas supplies. He noted that initial mitigation efforts included:

  • The transit of numerous loaded oil tankers during the war's first month.
  • The release of strategic petroleum reserves.
  • The drawing down of commercial inventories.

However, Woods cautioned that these temporary measures will eventually deplete, leading to price increases if the strait remains closed.

Impact of Strait Closure

Exxon Mobil provided specific projections regarding the impact of a prolonged closure of the Strait of Hormuz:

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  • Production Decline: If the strait remains closed through the second quarter, Exxon's Middle East production is expected to decline by 750,000 barrels per day compared to 2025 levels.
  • Overall Impact: This closure affects approximately 15% of Exxon's total production.
  • Refinery Throughput: Global throughput to Exxon's refineries is projected to fall by 3% compared to the fourth quarter of 2025.

Market Outlook and Recovery Timeline

Woods detailed the expected timeline for supply normalization, suggesting that oil flows from the Persian Gulf could take one to two months to stabilize after the strait reopens. This delay is attributed to:

  • The necessary repositioning of oil tankers.
  • The time required to work through the supply backlog.

Furthermore, he advised that governments and industry must replenish depleted strategic and commercial stockpiles, which would generate additional market demand and support higher prices.

Market Volatility and Company Stock

Oil futures trading has been characterized by high volatility, experiencing sharp rises amid escalation fears and subsequent drops during periods of peace optimism. On Friday, U.S. crude oil fell over 3% to $101.38 per barrel, while international Brent crude dropped about 2% to $108.

  • Comparison: Woods noted that while current prices align with historical levels over the last decade, they do not match the scale of the disruption in the Middle East.
  • Company Performance: Despite oil prices soaring about 57% since the war began, Exxon's stock was reported as being flat over the same period.
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