Exxon's Global Output Takes 6% Hit as Persian Gulf Conflict Disrupts Key Operations
By Bloomberg News
Exxon Mobil Corp. saw its worldwide production fall by 6% in the first quarter, the company disclosed Wednesday, as hostilities in the Persian Gulf crippled oil and natural gas operations across the region. The disruption underscores how the conflict is directly impacting international energy majors with deep stakes in the Middle East.
Half of the lost output stemmed from damage to a liquefied natural gas complex in Qatar, where Exxon is a partner. According to the company, two critical LNG production units, known as trains, were struck by Iranian missiles. "Public reports suggest the repairs will be extensive," Exxon said in a statement, adding that a full assessment is pending before a return-to-operations timeline can be established.
The Texas-based supermajor is among the first to detail the war's direct impact on its assets in the Gulf, a region that typically contributes about a fifth of its global production. The announcement coincided with a broader slide in energy stocks, pushing Exxon shares down 6.1% in pre-market trading in New York.
The financial ripple effects are substantial. Qatar has estimated the damaged facility could lose $20 billion in annual revenue and take up to five years to fully restore. Meanwhile, Exxon also warned of a $3.7 billion sequential drop in earnings for its energy products division, citing price volatility and cargo timing issues related to the conflict.
CFO Neil Hansen sought to reassure investors, stating the timing effects would unwind to reveal "sound trades" and "material" profitability. Excluding these factors, per-share earnings were higher than the previous quarter. The company also noted it booked about $2.5 billion in gains from higher crude and gas prices.
The incident has intensified warnings from industry leaders that markets have underestimated the conflict's severity. Analysts at JPMorgan Chase & Co. noted the war has "upended the perception of the Gulf as a safe and investable hub," predicting long-term damage to foreign investment in the region.
Reaction & Analysis:
"This is a stark reminder that geopolitical risk is baked into the energy business," said Michael Thorne, an energy sector analyst at Veritas Insights. "Exxon's diversified portfolio will cushion the blow, but the prolonged outage in Qatar shows how quickly a single event can disrupt global supply chains."
"It's infuriating," countered Sarah Chen, a portfolio manager at Green Horizon Capital, voicing a sharper critique. "For years, shareholders have funded massive buybacks while executives downplayed regional risks. Now, a predictable conflict leads to a multi-billion dollar loss and a five-year repair job? This is a failure of strategic foresight and capital allocation."
"The focus now shifts to insurance claims and force majeure clauses," noted David Fischer, a partner at law firm Clayton & Rowe specializing in energy contracts. "The legal and financial fallout from these disruptions will linger long after the physical repairs are done, setting precedents for future conflicts."
Exxon is scheduled to release full quarterly results on May 1. European rival Shell Plc also reported lower gas output in its recent trading update, signaling the war's broad impact across the sector.
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