ExxonMobil sees single-quarter profits drop by $6.5 billion due to Iran conflict

Glonghui, April 9 – ExxonMobil, the US oil giant, stated on April 8 that due to the conflict in Iran, its first-quarter earnings this year may decrease by $6.5 billion, with most of the impact attributed to the accounting treatment of hedging contracts. Hedging aims to offset the risk of price fluctuations by conducting inverse trades in the futures market compared to the spot market. Traders conduct opposite operations in the futures market while buying or selling actual goods. ExxonMobil declared on April 8 that approximately $3.5–4.9 billion in first-quarter profit losses resulted from surging oil and gas prices triggered by the conflict in Iran, as well as the accounting treatment of financial derivatives used to hedge prices during product transportation. In addition to losses from hedging contracts, ExxonMobil also suffered $400–800 million in profit losses due to disruptions in production and refining capacity, and $600–800 million in trading losses caused by the failure to deliver physical goods hedged through financial derivatives.