ExxonMobil on Wednesday warned its first-quarter earnings could take a hit of up to $6.5 billion tied to the war in Iran, though the company said most of the impact stems from accounting timing related to hedging contracts and is expected to reverse in future quarters.
In a statement, the U.S.-based oil major said the largest portion of the hit, between $3.5 billion and $4.9 billion, is linked to a surge in oil and gas prices during the Middle East conflict and how the company accounts for financial derivatives used to hedge shipments, the Financial Times reported.
Chief Financial Officer Neil Hansen said the impact reflects a temporary mismatch between when trades are recorded and when underlying transactions are completed.
"This quarter's earnings include an unusually large, negative timing impact associated with our trading programme and the temporary earnings impacts that result from how we account for certain trades. These are sound trades and the profitability that will result from them will be material," Hansen said.
The company added that the negative effect is a "timing effect" that will unwind in subsequent quarters, ultimately resulting in a net positive profit once the hedged transactions are completed.
Beyond the accounting-related impact, ExxonMobil said operational disruptions tied to attacks in the United Arab Emirates and Qatar will reduce global oil and gas production by 6% in the first quarter compared with the fourth quarter of 2025.
Those disruptions are expected to result in an earnings hit of $400 million to $800 million. Additional trading losses tied to an inability to deliver cargoes, which were hedged with financial derivatives, are projected to cost another $600 million to $800 million.
ExxonMobil has significant exposure to the Middle East, where about 20% of its oil and gas production and 5% of its refining and chemical capacity are located. The company holds stakes in liquefied natural gas joint ventures with QatarEnergy that were damaged in Iranian attacks last month.
Two gas liquefaction facilities in Qatar in which ExxonMobil has an ownership interest accounted for about 3% of its 2025 global oil and gas production, the company said.
"Public reports indicate the damage will take a prolonged period to repair. Pending an on-site evaluation, we are unable to comment," the company said.
Despite the headwinds, ExxonMobil said higher oil and gas prices following the start of the Middle East war on Feb. 28 are expected to provide a boost of $2.1 billion to $2.9 billion in first-quarter earnings.
Excluding the unfavorable timing effects, ExxonMobil said earnings for the quarter would be higher than in the fourth quarter of 2025.
Shares of ExxonMobil fell 5% in premarket trading on Wednesday to $154.70, as traders reacted to a two-week U.S.-Iran ceasefire deal.
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