Exxon CEO Warns Oil Markets Underestimate Impact of Hormuz Closure

Exxon Mobil CEO Darren Woods cautioned investors during a first-quarter earnings call that global oil markets have yet to fully price in the supply shocks resulting from the conflict in Iran and the closure of the Strait of Hormuz. While oil futures have remained volatile, Woods argued that current prices—approximately $101 for U.S. crude and $108 for Brent—are more aligned with historical norms than the current geopolitical reality. According to Woods, the immediate impact of the closure was softened by a high volume of tankers already in transit during the first month of the war, as well as the release of strategic petroleum reserves and the drawdown of commercial inventories. However, he warned that these buffers are finite and will eventually be exhausted, leading to further price increases if the strait remains closed. The disruption is hitting Exxon's operations directly. The company warned that Middle East production could drop by 750,000 barrels per day compared to 2025 levels if the strait remains closed through the second quarter. Approximately 15% of Exxon's total production has been impacted, and refinery throughput is expected to decline by 3% relative to the final quarter of 2025. Beyond crude oil, the conflict has impacted natural gas infrastructure. Iranian attacks on a Qatari LNG export hub damaged two production lines in which Exxon holds an ownership interest, representing roughly 3% of the company's 2025 upstream production. Looking ahead, Woods expects a period of logistical adjustment once the strait reopens, as tankers must be repositioned and supply backlogs cleared. He emphasized that the subsequent need for governments and industry players to refill depleted strategic and commercial inventories will likely sustain upward pressure on global energy prices.