Geopolitical Conflict Disrupts ExxonMobil and Shell Production Amid Brent Oil Surge

The first quarter of 2026 has seen a dramatic shift in the energy landscape as conflict with Iran triggered a 94% surge in Brent crude prices, marking the largest quarterly gain since 1990. While the price spike suggests a windfall for producers, operational realities in the Middle East have complicated the outlook for industry leaders ExxonMobil and Shell. Military actions and subsequent retaliations have severely impacted infrastructure in the Persian Gulf, including the effective closure of the Strait of Hormuz. In Qatar, Iranian attacks damaged two of the nation's 14 liquefied natural gas (LNG) trains—representing a 17% loss in production capacity—and a critical gas-to-liquids (GTL) facility. ExxonMobil, which holds stakes of 34% and 30% in the damaged S4 and S6 LNG trains respectively, expects its global oil and gas production to be 6% lower in the first quarter compared to the end of 2025. Shell faces a similar trajectory, with production projected to fall 7% due to the Qatari outages impacting its integrated gas business. The financial impact is a complex mix of losses and gains. Exxon anticipates a $4.9 billion loss on derivatives, while Shell expects a $15 billion working capital hit. However, these are partially offset by price gains; Exxon expects a $2.3 billion boost from oil and $600 million from natural gas. Shell's earnings are now projected to be 10% higher than initial estimates. Recovery will be a long-term process, with QatarEnergy estimating three to five years for LNG train repairs. While a ceasefire has been reached, the normalization of the Strait of Hormuz remains uncertain, ensuring that volatility and elevated energy prices will likely persist in the near term.