Chevron said it expected first-quarter upstream earnings to rise between $1.6 billion and $2.2 billion from the previous quarter, fueled by higher oil prices due to the Iran war, though an impact from hedging could weigh on results.
The U.S. oil major said timing effects tied to hedging and accounting were expected to cut into earnings and operating cash flow, excluding working capital, by $2.7 billion to $3.7 billion after tax, largely in its downstream business. The impact is expected to reverse in the future, it said.
The warning mirrors comments from rival ExxonMobil, which earlier signaled that while higher oil prices could lift upstream earnings by about $1.4 billion compared with the fourth quarter, overall earnings could fall as a multi‑billion‑dollar hit from financial hedging outweighs price gains.
The conflict, which started on February 28, sent oil prices skyrocketing as much as 65%, with some oil and gas fields in the Middle East shutting production after the Strait of Hormuz - a conduit for a fifth of global energy flows - was effectively closed.
Shares of the company rose about 1% in premarket trading, tracking higher oil prices.
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"Chevron has the lowest exposure to the Middle East across the supermajors, with liquids from the region accounting for just over 1% of group production, leaving it better placed than peers to benefit from the current commodity upside," said RBC Capital Markets analyst Biraj Borkhataria.
Chevron's net oil-equivalent production is expected to average 3.8 million to 3.9 million barrels per day, with volumes affected by downtime at Kazakhstan's Tengizchevroil project and reduced output in parts of the Middle East.
Across the Atlantic, Shell also said weaker first-quarter gas output and a hit to short-term liquidity would be partly offset by stronger oil trading, offering an early glimpse into how the U.S.-Israeli war on Iran is reshaping oil majors' earnings.
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Chevron, which is expected to report results on May 1, posted fourth-quarter upstream earnings of $3.04 billion.
Analysts expect the oil major to post net income of $3.2 billion for the quarter ended March 31, according to data compiled by LSEG.
