What’s News in Earnings: Oil Companies Look Forward to a Windfall

Summary

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WSJ What’s News

Episode: What’s News in Earnings: Oil Companies Look Forward to a Windfall
Date: May 5, 2026
Host: Benoit Morin
Guests: Colin Eaton (Wall Street Journal energy reporter), Mike Wirth (Chevron CEO, audio clip)

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Episode Overview

This episode examines the impact of the Iran war and the closure of the Strait of Hormuz on global oil markets and, consequently, the first-quarter earnings of major oil companies like Exxon and Chevron. The conversation insights into how these companies have benefited financially from surging oil prices, how they’re responding strategically, and what it all means for US consumers in the months ahead.

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Key Discussion Points & Insights

1. Oil Companies’ Windfall from the Iran War

• Supply Shock: The quarter began with concerns about oil oversupply, but the Iran war and Strait of Hormuz closure flipped the situation—there’s now a global oil shortage.
  • “They entered it concerned about an oversupply of oil in global markets. But the Iran war and the closure of the Strait of Hormuz mean the world is now short with crude and other petroleum products.” (Benoit Morin, 00:36)
• Earnings Beat: Exxon and Chevron both outperformed Wall Street’s expectations due to higher oil prices—though the long-term outlook remains uncertain due to geopolitical tensions.
• Ongoing Uncertainty: “The Trump administration and Iran are fighting for control of the strait, and American producers don't know how and when this ends.” (Benoit Morin, 00:57)

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2. How Geopolitical Events Translate to Earnings

• Cash Surplus:
  • “Exxon, for example, the cash flow from its operations in places like West Texas and Guyana, that all added up to almost $14 billion.” (Colin Eaton, 01:48)
• Accounting Complications:
  • Both Exxon and Chevron reported paper losses due to the way physical oil trades are accounted for—temporary but will eventually bolster earnings.
• Stock Performance:
  • “They are expected to make a ton of money this year. That’s why their shares are near all time highs.” (Colin Eaton, 02:32)

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3. Corporate Strategy: Windfall Use and Capital Discipline

• Reluctance to Ramp Up Drilling:
  • The industry is slower to react to price spikes compared to the shale boom era: “They’re a bit more cons now than they were a decade ago during the shale boom.” (Colin Eaton, 03:18)
• Shareholder Returns Over Reinvestment:
  • “Since 2022, Exxon, Chevron and another big US oil company, ConocoPhillips, they've spent $301 billion on dividends and share repurchases ... versus $222 billion on reinvesting in projects.” (Colin Eaton, 03:30)
• Capital Plans Unchanged:
  • Companies are sticking to pre-crisis capex plans, signaling caution despite the current windfall.

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4. Market Impact & Outlook for Consumers

• Grim Outlook for Gas Prices:
  • “Yesterday the national average for a gallon of regular gasoline reached $4.45 ... we haven't seen the worst of the supply crunch in physical markets.” (Colin Eaton, 04:17)
• Ongoing Supply Crunch:
  • “As the Strait is snarled, the longer it's snarled, ultimately it's going to translate into higher prices at the pump.” (Colin Eaton, 04:25)
• Market Structural Change:
  • Notable quote from Chevron CEO Mike Wirth:

    “In a world that is getting very tight on products, we're going to keep our assets very full and be able to provide a significant supply into markets that dearly need it.” (Mike Wirth, 04:52)

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5. Company Operations Amid Crisis

• Maximizing Output:
  • “Both Exxon and Chevron ... are churning out as much gasoline and jet fuel and other products as they can right now.” (Colin Eaton, 05:03)
• Shifting Exports:
  • Exxon is redirecting tankers from the Gulf Coast to Asia to meet higher demand there.

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Notable Quotes & Moments

• Colin Eaton on cash windfall:

  “Exxon ... that all added up to almost $14 billion. That's higher than the company's quarterly average for the past three years.” (01:49)

• Colin Eaton on corporate priorities:

  “They're focused on dividends and share repurchases ... $301 billion on dividends and share repurchases ... versus $222 billion on reinvesting.” (03:19–03:30)

• Colin Eaton on fuel prices:

  “Yesterday the national average for a gallon of regular gasoline reached $4.45. ... We haven't seen the worst of the supply crunch.” (04:17)

• Chevron CEO Mike Wirth on strategy:

  “We're going to keep our assets very full and be able to provide a significant supply into markets that dearly need it.” (04:52)

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Key Timestamps

• 00:25 – Introduction and summary of the quarter's oil market upheaval
• 01:44 – Oil companies’ cash windfall and market context
• 03:09 – How oil majors are channeling their profits and capital strategy
• 04:07 – Expectations for fuel prices and future market trends
• 04:52 – Chevron CEO Mike Wirth on adapting to supply tightness
• 05:03 – Company operations and global product flows

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This episode is a concise yet thorough analysis of how major global events—like the Iran war and Strait of Hormuz closure—reshape the earnings and strategies of the world’s biggest oil companies, and the cascading effects on markets and consumers. The tone is informative, direct, and timely, with a focus on hard numbers and insider perspective.

Transcript

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[Benoit Morin]

Foreigners It's Tuesday, May 5th. I'm Benoit Morin for the Wall Street Journal, and this is what's news in earnings or look at some of the biggest themes standing out this earnings season. And well, it's been a roller coaster of a quarter for oil companies. They entered it concerned about an oversupply of oil in global markets. But the Iran war and the closure of the Strait of Hormuz mean the world is now short with crude and other petroleum products. Oil prices have jumped, and Exxon and Chevron both beat Wall Street's expectations. But the big picture is murky. The Trump administration and Iran are fighting for control of the strait, and American producers don't know how and when this ends. And because they don't know how sustainable the rising prices will be, they're not ready to pump much more oil than they are, at least for now. We're joined now by Wall Street Journal energy reporter Colin Eaton, who covers big oil. So, Colin, oil prices surged this quarter on the back of the Iran war. Did that translate into a windfall for Exxon, Chevron and the other majors?

[Colin Eaton]

So it definitely padded their cash position. Exxon, for example, the cash flow from its operations in places like West Texas and Guyana, that all added up to almost $14 billion. That's higher than the company's quarterly average for the past three years. And higher oil and gas prices definitely will keep boosting their profits as long as the Strait of Hormuz is blocked. And for a good while after it reopens, it's going to take months for oil markets to settle down. And while that's happening, these two companies are going to continue to collect high, higher revenue. But in the first quarter, it got a little complicated. Exxon and Chevron both had to take on paper losses. This is related to the way they do their accounting on physical trades in the market. This kind of shaved off a couple of billion dollars from their quarterly net income. So suffice to say, the companies made some trades that have yet to close on the physical market. But when those unwind, they're gonna further pad the company's bottom lines. So yeah, they are expected to make a ton of money this year. That's why their shares are near all time highs.

[Benoit Morin]

So what did the company say about how they plan to use all this cash? Could they drill more?

[Colin Eaton]

You'd think so, right? But since the pandemic, the oil pumping industry as we know it has been a lot slower to react to these sort of big swings in prices. They're a bit more cons now than they were a decade ago during the shale boom. These days they're focused on dividends and share repurchases. So let's look at the numbers. Since 2022, Exxon, Chevron and another big US oil company, ConocoPhillips, they've spent $301 billion on dividends and share repurchases or buybacks. By comparison, they spent about 222 billion reinvesting in projects and in the oil patch, generally speaking. So you can see that where their priorities have shifted, this time's no different. They're sort of sticking to their capital expenditure plans that they set out months before the Iran conflict began.

[Benoit Morin]

So those big old CEOs, how do they see the next few months playing out for global energy markets and perhaps more importantly for US Consumers?

[Colin Eaton]

Well, it's pretty grim. I'm not going to be taking any cross country road trips this summer. So yesterday the national average for a gallon of regular gasoline reached $4.45. But yeah, the executive warned that, you know, we haven't seen the worst of the supply crunch in physical markets. As the Strait is snarled, the longer it's snarled, ultimately it's going to translate into higher prices at the pump. Chevron CEO Mike Wirth, he said the energy market is going to be radically changed by the aftermath of the closure of the Strait of Hormuz.

[Chevron CEO Mike Wirth]

In a world that is getting very tight on products, we're going to keep our assets very full and be able to provide a significant supply into markets that dearly need it.

[Colin Eaton]

And both Exxon and Chevron, they are. They're churning out as much gasoline and jet fuel and other products as they can right now. Chevron's refineries in the U.S. they said we're producing record amounts of fuel. Exxon has been redirecting tankers from the Gulf coast to Asia for fueled buyers with more immediate needs.

[Benoit Morin]

And that was what's news in earnings. Today's show was produced by Anthony Bansi with supervising producer Tali Arbel. Additional sound courtesy of S and P Global Market Intelligence. Later today we'll have the PM Edition of Wets news out for you as usual. And we'll be back later this earnings season. Diving into another industry. Until then, I'm Benoit Moran. Have a great day.

[Colin Eaton]

Hey, Mama.

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[Benoit Morin]

Hi, Ma.

[Chevron CEO Mike Wirth]

Thanks for your unfiltered advice.

[Colin Eaton]

Hi, Mom.

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Thanks for always being by the phone.

[Chevron CEO Mike Wirth]

Hey, Mom. Happy Mother's Day.

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