Exxon Mobil CEO Darren Woods warned Friday that the market has not absorbed the full impact of the unprecedented oil supply disruption triggered by the Iran war and the closure of the Strait of Hormuz.
The disruption has been mitigated by the large number of loaded oil tankers that were in transit during the first month of the war, Woods told investors on Exxon’s first-quarter earnings call. Strategic petroleum reserves have also been released and commercial inventories drawn down, the CEO said.
One of these supply sources will become exhausted as the conflict goes on, Woods said. Oil prices will then increase as the strait remains closed, he said.
“It’s obvious to most that if you look at the unprecedented disruption in the world supply of oil and natural gas, the market hasn’t seen the full impact of that yet,” Woods said.
“There’s more to come if the strait remains closed,” the CEO said.
Oil futures trading has been volatile during the war. Prices have soared on the risk of escalation and then plunged on hopes for peace before repeating the cycle. U.S. crude oil fell more than 3% Friday to $101.38 per barrel, while international benchmark Brent was down about 2% to $108.
These prices are more consistent with historic levels over the past decade rather than the scale of the disruption in the Middle East, Woods said.
Woods expects oil flows from the Persian Gulf to normalize in a month or two after the strait reopens. Tankers need to be repositioned, the supply backlog needs to be worked through and it takes time for the vessels to reach their destinations, the CEO said.
Governments and industry will need to refill their strategic reserves and commercial inventories if stockpiles are depleted when the conflict ends, Woods said. This will bring more demand to the market and put upward pressure on prices, he said.
Exxon warned Friday that its production in the Middle East would decline by 750,000 barrels per day compared with 2025 if the strait remains closed through the second quarter. Its throughput to refiners around the world would fall 3% compared with the fourth quarter of 2025.
About 15% of Exxon’s total production has been impacted by the closure of the strait, Woods told CNBC on Friday.
Iranian attacks on Qatar’s liquefied natural gas export hub damaged two production lines that Exxon has an ownership interest in, according to a filing with the Securities and Exchange Commission in early April. The lines accounted for about 3% of Exxon’s upstream production in 2025.
Exxon shares were down about 1% in midday trading. While oil prices have soared about 57% since the war started through Thursday’s settled price, Exxon’s stock is flat over the same period.
