The two largest oil companies in the United States reported significantly lower profits during the first quarter, despite crude and gasoline prices surging during the period. The decline resulted primarily from financial hedges that deteriorated after military attacks on Iran in late February disrupted global oil markets. Both Exxon Mobil and Chevron announced their quarterly results on Friday, with adjusted earnings exceeding analyst forecasts.
Exxon Mobil reported first-quarter profit of $4.18 billion, or $1 per share, compared with $7.7 billion, or $1.76 per share, a year earlier. The company absorbed nearly $4 billion in losses tied to what it characterized as unfavorable timing effects from its hedging positions. When adjusted to exclude one-time impacts, Exxon earned $1.16 per share, surpassing the $1.07 consensus estimate from analysts surveyed by Zacks Investment Research. The company's revenue reached $85.14 billion, exceeding Wall Street's expectation of $81.49 billion. Production declined to 4.6 million oil-equivalent barrels per day from 5 million in the previous quarter.
Chevron reported first-quarter profit of $2.21 billion, or $1.11 per share, down from $3.5 billion, or $2 per share, in the prior year. The company recorded a $360 million net loss related to a legal reserve and incurred $223 million in losses from foreign currency effects. Adjusted profit reached $1.41 per share, substantially exceeding the 92-cent forecast. Revenue totaled $48.61 billion, also surpassing expectations.
Both companies had implemented hedges during early 2024 when energy prices were depressed, a standard industry practice to manage volatility. After the attacks on Iran, however, the situation shifted dramatically. The near-closure of the Strait of Hormuz made physical oil delivery impossible, preventing the companies from booking gains on their hedging positions until crude could physically change hands. Approximately 20 percent of the world's daily oil supply typically passes through the strait.
The earnings reports come as gasoline prices in the United States reached multiyear highs. The average price hit $4.39 per gallon on Friday, marking an increase of more than 8 percent for the week, according to motor club AAA. Inflation data from the U.S. Department of Labor showed the largest monthly jump in gas prices in six decades, straining household budgets and business operations. Airlines worldwide have begun canceling flights as elevated jet fuel costs and supply constraints ripple through the sector. BP reported first-quarter profits more than doubled during the same reporting period.
