ExxonMobil, TotalEnergies and Shell are among the companies with more exposure to disruptions in oil and gas production due to the U.S.-Israel war with Iran, analysts said in research notes this week.
- Energy Giant Exposure: Analysts identify ExxonMobil, TotalEnergies, and Shell as the companies most vulnerable to the conflict, with Middle Eastern operations accounting for 20% to 29% of their total production.
- Supply Disruptions: Military strikes and Iranian drone attacks have forced the shutdown of major oil and gas fields, including a total halt of LNG production in Qatar, which supplies 20% of the global market.
- Market Volatility: The closure of the Strait of Hormuz has triggered a massive price surge, with European natural gas jumping 40% and Brent crude rising to over $77 per barrel.
The U.S. and Israel's strikes on Iran on Saturday, which killed Iran's supreme leader Ayatollah Ali Khamenei, have roiled the energy sector.
The conflict has forced the shutdown of some oil and gas fields in the region and effectively halted shipping through the Strait of Hormuz, an important waterway between Iran and Oman through which tankers carrying crude oil, fuel and liquefied natural gas from major Middle Eastern producers and refiners must travel on their way to buyers.
Analysts at Jefferies estimate 29% of French oil major TotalEnergies' total production is in the Middle East while the region accounts for 20% of Exxon's oil and gas output and 20% for Shell.
Even as the war threatens some production, it has caused a surge in oil and gas prices that could help prop up the companies' profits. Brent crude futures settled up about 7% on Monday at $77.74 per barrel, while the European natural gas benchmark jumped about 40%.
One of the most significant impacts could be to Exxon's liquefied natural gas portfolio. Nearly 60% of the U.S. oil major's LNG business is concentrated in the Middle East, TD Cowen said.
Exxon declined to comment on its operations in the region, while Shell and TotalEnergies did not immediately respond to requests for comment.
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The three companies are all partners of Qatar's state-owned energy firm QatarEnergy, which halted LNG production on Monday following Iranian drone attacks on its facilities. The country accounts for about 20% of global LNG supply.
Exxon will eventually benefit from the startup of Golden Pass LNG, its project in Texas that is expected to begin production this month, noted Betty Jiang, an analyst from Barclays.
In addition to LNG stakes in the Middle East, TotalEnergies produces oil and gas in the UAE and Shell has a significant presence in Oman.
