FINWIRES · TerminalLIVE
FINWIRES

Chevron Upstream Gains Offset by Timing Impacts; Exxon Hit by Disruptions, RBC Says

By

Chevron (CVX) and ExxonMobil (XOM) are to post Q1 results this week, with consensus EPS at $1.02 and $0.94, respectively, amid war-driven market volatility, RBC Capital Markets said in a Tuesday note.

Chevron could report adjusted EPS of $1.02 per share versus RBC's $0.83 estimate, while cash flow from operations may reach $6.72 billion compared with $6.26 billion forecast, RBC said.

The company's upstream segment may gain $1.6 billion to $2.2 billion from stronger commodity prices, while production could range between 3.8 million and 3.9 million barrels of oil equivalent per day, RBC added.

Chevron faces negative downstream timing impacts of $2.7 billion to $3.7 billion after tax due to the Middle East conflict, although these effects should reverse over time, the note said.

Chevron maintains limited exposure to the Middle East, with regional liquids accounting for just over 1% of output compared with 8% for Exxon and 11% to 19% for European peers, RBC said.

RBC expects Chevron may raise its share buyback guidance above the current $10 billion to $20 billion range, with consensus estimating $3.7 billion for Q2 and $13.7 billion for the full year, it said.

ExxonMobil could post adjusted EPS of $0.94 per share versus RBC's $1.17 estimate, while cash flow may total $10.62 billion compared with $14.45 billion forecast, RBC said.

The company reported negative timing effects of $3.5 billion to $4.9 billion, equivalent to about $0.93 per share at the midpoint, which it expects to reverse over time, the note said.

Exxon expects volume disruptions in the Middle East to reduce earnings by $400 million to $800 million, with an additional $600 million to $800 million impact tied to hedged cargoes, RBC added.

Upstream production could decline about 6% sequentially, although tax regimes in the Middle East may limit the overall earnings impact, the note said.

RBC said Exxon has greater regional exposure, with Qatar LNG accounting for about two-thirds of its global liquefied natural gas portfolio, thereby increasing sensitivity to disruptions.

Investors are focusing on damage to Middle East assets, including two LNG trains in Qatar, which may take three to five years to return to full operations, RBC said.

Refining margins remain a key uncertainty, with Exxon capturing only $0 to $400 million in uplift, lower than earlier expectations, the note added.

RBC set a $220 price target for Chevron based on a 10x 2027 EV/DACF multiple, while Exxon carries a $180 target using an 11x multiple, reflecting relative valuation differences, it said.

The firm maintained an Outperform rating on Chevron and a Sector Perform rating on ExxonMobil, citing differing exposure to geopolitical risks and earnings visibility, the note said.

Price: $188.18, Change: $+3.40, Percent Change: +1.84%

Related Articles

Oil & Energy

Iran Reportedly Proposes Hormuz Reopening as US Reviews Plan

Iran has proposed reopening the Strait of Hormuz while delaying nuclear talks, with Leavitt saying the proposal is under discussion, according to media reports.US President Donald Trump discussed the Iranian proposal with senior national security officials during meetings held on Monday, Karoline Leavitt, White House Press Secretary, said in a press briefing."I can confirm the president has met with his national security team this morning," Leavitt said, adding that the proposal is reportedly being discussed.Leavitt did not comment on whether the administration would accept the proposal.The proposal presented by Iran on Sunday suggests reopening the Strait of Hormuz while postponing negotiations over the nuclear program to a later stage, according to media reports.Leavitt said Trump's key conditions remain unchanged. She declined to confirm whether the administration is actively considering the proposal and said Trump will address the issue publicly soon.US Secretary of State Marco Rubio criticized the proposal, arguing it would give Iran control over access to an international waterway, Rubio said in an interview with Fox News.Rubio said Iran's approach would require ships to seek permission or face threats, which he said undermines the principle of open international navigation.He added the US would not accept any system that allows Iran to regulate access or impose costs on vessels using the Strait of Hormuz.The developments follow a planned second round of US-Iran talks over the weekend that did not proceed as expected.US President Donald Trump said he did not send representatives to Islamabad, citing internal divisions within Iran's leadership, according to a Truth Social post on Saturday.Trump said, "... there is tremendous infighting and confusion within their leadership," adding, "If they want to talk, all they have to do is call!"The US Department of State did not immediately respond to' requests for comment.Oil markets reacted to the developments, with Brent crude rising about 2.77% to $108.25 per barrel and US West Texas Intermediate gaining about 2.42% to $96.68.

Oil & Energy

US Oil Update: Crude Rises as US-Iran Stalemate Keeps Hormuz Disruptions in Focus

Crude oil futures climbed in after-hours trading on Monday as peace talks between the US and Iran stalled and shipments through the Strait of Hormuz remained severely limited, keeping global supplies tight.Front-month West Texas Intermediate crude futures gained 2.22% to $96.52 per barrel, while Brent futures were up 2.68% to $108.11/bbl.The world is living on borrowed barrels and on borrowed time until the Strait of Hormuz reopens, Bjarne Schieldrop, chief commodities analyst at SEB Research, said, adding that the June contract is up as tentative US-Iran talks faltered to nothing this weekend.US officials are discussing a new Iranian proposal on resolving the war with Tehran, the White House said Monday, as the conflict remains in a stalemate with energy supplies from the region reduced.White House Press Secretary Karoline Leavitt reportedly said that President Trump had convened a meeting of national security officials earlier in the day to discuss the Iranian proposal.She said Trump's "red lines with respect to Iran have been made very, very clear," adding that Trump would address the matter "very soon."The US Treasury Department also said on Monday that Washington will sanction any country conducting business with sanctioned Iranian airlines, including the provision of jet fuel."The Treasury will impose maximum pressure on Iran and will not hesitate to act against any third parties that facilitate or conduct business with Iranian entities," the Treasury said in a social media post on X.Meanwhile, Iran's Foreign Minister Seyed Abbas Araghchi also said that Tehran was reviewing President Trump's request for negotiations, according to media reports.ING strategists said the lack of progress means the market is tightening every day, requiring oil prices to reprice higher, as there is little alternative to fill the about 13 million b/d shortfall.Araghchi also met Russian President Vladimir Putin in Moscow on Monday to discuss the conflict as negotiations between the sides appear to have stalled.Putin reportedly told Araghchi that Russia would "do everything that serves your interests, the interests of all the people of the region, so that peace can be achieved as soon as possible".The US and Iran have mostly observed a ceasefire since early April, but the double blockade of the Hormuz has ground vessel traffic through the strategic waterway to near zero.Saxo Bank strategists said crude is set to grind higher as Hormuz remains effectively closed, extending disruptions across the Middle East and tightening the availability of critical commodities."Brent crude trades at a three-week high as efforts to revive peace talks have stalled, with an Iranian proposal reportedly calling for nuclear negotiations to be postponed to a later stage," Saxo Bank analysts said.

Oil & Energy

Crude Market Faces "Cruel Summer" as War-Driven Supply Shock Ripples West, RBC Says

The Middle East conflict is tightening global energy markets and raising the risk of a "cruel summer" for consumers, as constrained supply collides with peak seasonal demand and policymakers struggle to contain the fallout, RBC Capital Markets strategists said in a note on Sunday.RBC analysts said the conflict, now in its third month, has displaced up to 1 billion barrels of crude and refined products from global markets, marking what some analysts describe as the largest supply shock in modern history.However, despite intermittent ceasefire signals and market optimism around a reopening of the Strait of Hormuz, negotiations between Iran and the US remain deadlocked.Iran has refused to abandon uranium enrichment, while the US has yet to secure meaningful concessions, with recent talks failing to materialize.RBC said for weeks the Trump administration has leaned on messaging that the conflict could end soon, helping cap near-term oil prices. However, market participants said that the narrative may be masking the severity of the supply crunch and delaying necessary demand destruction."The price response has been unusually muted given the scale of the disruption," RBC analysts said, adding that subdued prices risk fostering complacency among policymakers and consumers alike.The analysts said even in a best-case scenario, the return of Middle Eastern supply is expected to be slow. Damage to oil fields, export terminals, and logistics networks could take 3 to 6 months to repair, RBC said, with longer timelines likely if subsurface infrastructure has been severely damaged.Uncertainty over the true extent of the damage remains high, with satellite imagery offering only partial insights and on-the-ground assessments still pending.Meanwhile, global inventories are drawing down as supply remains constrained. RBC analysts expect crude and refined product prices to rise further into the summer, driven by steady demand and tightening fundamentals.Refinery margins are also set to strengthen, as limited product availability pushes up fuel prices. However, the dynamic carries risks, as higher costs could eventually trigger demand destruction and weigh on the global economy.Though Asia has been the epicenter of the crisis, the effects of the Iranian conflict are being felt in Europe, where energy import costs have surged.The European Union has spent an additional 24 billion euros ($28.1 billion) on fossil fuel imports since February, with aviation among the hardest-hit sectors.Major carriers, including Lufthansa, KLM, and Scandinavian Airlines, have collectively canceled tens of thousands of flights due to high fuel costs and route constraints. Some airlines said that fuel supplies are only secured through mid-May, raising the prospect of further disruptions.The conflict is also accelerating shifts in consumer behavior. Electric vehicle adoption is rising rapidly, with battery-electric registrations in Europe jumping in early 2026, while second-hand EV sales have surged in key markets.On the demand side, RBC said Asian governments are taking aggressive steps to curb energy consumption.South Korea has extended fuel price controls, while India has cut industrial LNG supplies by 20%. Bangladesh has introduced fuel rationing, and countries including the Philippines, Vietnam, and Sri Lanka have reinstated remote work policies and driving restrictions.China, the world's largest energy importer, appears better positioned to absorb the shock, having built up strategic reserves. However, its reliance on Middle Eastern supply, which accounts for more than half of its imports, leaves it exposed to prolonged disruption.RBC analysts said that the combination of steady demand, constrained supply, and limited price response could amplify the eventual market correction.The analysts said any additional disruptions, including refinery outages, export restrictions, or further attacks on energy infrastructure, could exacerbate shortages just as summer demand peaks.