Big Oil Earnings Set To Sharply Decline. Blame This Tug-Of-War.

Why It Matters

The earnings outlook highlights how geopolitical volatility and hedging strategies can sharply swing profitability for the world’s largest oil producers, influencing investor sentiment and energy market dynamics.

Key Takeaways

• Exxon Q1 EPS forecast 98 cents, down 44%
• Chevron Q1 EPS forecast 97 cents, down 55%
• Exxon revenue $81.1B falls 2.4%; Chevron revenue $51.9B rises 9%
• Hedging contracts limited profit from 80% oil price surge
• Both firms expect earnings rebound in 2026 after three weak years

Pulse Analysis

The first quarter of 2024 has been defined by a dramatic oil price surge, largely fueled by the escalating U.S.–Iran confrontation. Brent and WTI futures vaulted close to $110 per barrel before retreating, leaving major producers with a mixed bag of higher headline prices but constrained cash flow. Hedging programs, designed to smooth earnings across volatile markets, have backfired for Chevron and Exxon Mobil, turning potential windfalls into paper losses. This dynamic underscores the delicate balance oil majors must strike between protecting against price drops and forfeiting upside when geopolitical shocks drive prices higher.

Analysts now anticipate Exxon Mobil reporting earnings per share of 98 cents, a 44% decline from the prior year, while revenue is expected to dip 2.4% to roughly $81.1 billion. Chevron’s outlook is similarly bleak on earnings, with EPS projected at 97 cents—a 55% slide—but its top line shows a healthier 9% increase to $51.9 billion, reflecting stronger upstream activity and a more favorable cost structure. Both firms attribute the earnings compression to derivative contracts that locked in lower oil prices earlier in the year, preventing them from capitalizing on the near‑80% price rally. Operationally, Chevron remains the only U.S. major still active in Venezuela, whereas Exxon is eyeing potential investments there after recent U.S. political developments, adding another layer of geopolitical risk to their portfolios.

Looking ahead, the consensus is that the hedging drag will ease, allowing earnings to rebound through 2026 as oil prices stabilize and the companies leverage record output, low debt, and robust cash generation. Investors are watching the upcoming earnings releases for clues on how quickly the majors can translate higher crude prices into bottom‑line growth. Meanwhile, downstream players like Valero have already benefited from the price environment, highlighting the divergent impacts across the energy value chain. The earnings trajectory of Chevron and Exxon will therefore serve as a bellwether for the broader sector’s resilience amid ongoing geopolitical uncertainty.