Exxon CEO Warns of Unpriced Risk from Hormuz Oil Disruption

Global Oil Market Braces for Further Price Increases

The global oil market is still reeling from the effects of supply disruptions caused by the Iran war and the closure of the Strait of Hormuz. According to Exxon Mobil CEO Darren Woods, the full impact of these disruptions has not yet been absorbed, and prices could rise further if the situation persists.

Speaking on Exxon's first-quarter earnings call, Woods explained that the current oil price levels do not fully reflect the scale of disruption in global oil and gas supply. The US crude price fell by more than 3 percent on Friday to $101.38 per barrel, while Brent crude declined by about 2 percent to $108, levels that are more consistent with historical averages over the past decade rather than an unprecedented supply shock.

The initial phase of the disruption was mitigated by a backlog of shipments that continued to reach markets even after the conflict began. Strategic reserves and inventory drawdowns have also supported supply, but these buffers are finite.

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Exxon's Operations Impacted

Exxon said its own operations have been directly affected by the closure of the Strait of Hormuz. The company warned that production in the Middle East could decline by 750,000 barrels per day compared with 2025 levels if the Strait remains closed through the second quarter. Throughput to refiners globally would fall by about 3 percent compared with the fourth quarter of 2025.

In addition, Iranian attacks on Qatar's liquefied natural gas export infrastructure damaged two production lines in which Exxon holds a stake. These assets accounted for roughly 3 percent of Exxon's upstream production in 2025.

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Volatility in Oil Markets

Oil markets have remained volatile since the start of the conflict, with prices rising on escalation risks and falling on expectations of de-escalation. Despite oil prices rising by about 57 percent since the war began, Exxon's shares were flat over the same period and were down by about 1 percent in midday trading on Friday.

Recovery Timeline

Woods said oil flows from the Persian Gulf could take one to two months to normalise after the Strait of Hormuz reopens. Tankers would need to be repositioned and supply backlogs cleared before shipments stabilise. He also noted that governments and companies would need to rebuild strategic reserves and commercial inventories if stockpiles are depleted during the conflict. This replenishment cycle would add to demand and could place additional upward pressure on oil prices.

The Strait of Hormuz is one of the world's most critical energy transit routes, carrying a significant share of global oil and natural gas exports. Disruptions in the waterway have historically led to sharp reactions in energy markets due to limited alternative routes for Gulf producers. The current disruption follows an escalation in tensions involving Iran that has affected shipping and energy infrastructure across the region.