XOM Back Above $160: Are Higher Oil Prices Reigniting Earnings Leverage?

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2026/09/29 09:21

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XOM Back Above $160: Are Higher Oil Prices Reigniting Earnings Leverage? image 0

Exxon Mobil (NYSE: XOM) has returned to the spotlight within the energy sector. As of September 28, the stock closed at $162.52, still about 8% below its 52-week high of $176.41 set in March. Meanwhile, Brent crude has climbed back to around $106 per barrel, as persistent Middle East supply risks continue to support energy prices.

For Exxon, the current setup goes beyond simply benefiting from higher oil prices. The company’s expanding low-cost upstream assets and massive global refining system are now entering a period of stronger profit contribution at the same time.

Higher Oil Prices Are Flowing Directly Into Earnings

Exxon reported adjusted earnings of $14.68 billion in the second quarter, with free cash flow reaching $17.2 billion. Adjusted earnings from the upstream segment came in at $9.19 billion, while Energy Products contributed $4.1 billion.

The current environment gives Exxon exposure to two major sources of earnings leverage. Higher crude oil and natural gas prices directly lift upstream profitability, while stronger diesel and gasoline refining margins support downstream earnings.

This is what separates XOM from a simple oil-price trade. If crude prices remain elevated while refining margins also stay strong, earnings and cash flow could improve much faster than the market previously expected under a lower-price environment.

Guyana and the Permian Continue to Add Low-Cost Growth

Permian production exceeded 1.8 million barrels of oil equivalent per day in the second quarter, reaching a new record. In Guyana, Exxon’s operations produced their one-billionth barrel of oil in September. The four offshore projects currently in production have combined capacity of more than 900,000 barrels per day, while the fifth project, Uaru, is expected to begin production by year-end.

The significance of these assets comes down to both scale and cost. Continued production growth from Guyana and the Permian allows Exxon to capture greater upside when oil prices are high, while their lower cost structure provides stronger cash-flow resilience if crude prices eventually weaken.

As a result, the market is increasingly trading more than just “higher oil prices.” Exxon’s improving production profile and asset quality are becoming equally important parts of the investment case.

Higher Oil Prices Also Raise Market Expectations

The main risk is that crude prices already contain a significant geopolitical premium. If tensions in the Middle East ease and shipping conditions through the Strait of Hormuz normalize, both crude prices and refining margins could fall quickly, putting pressure on energy stocks.

Investors will also need to watch refinery operations, the pace of new project start-ups in Guyana, and whether Permian production can continue expanding. At current levels, the market increasingly expects Exxon to convert the favorable commodity environment into stronger earnings and cash flow.

$160 Becomes the Near-Term Line in the Sand

From a technical perspective, $160 is the first key support level, followed by the $155–158 area. On the upside, $169–170 represents the next near-term resistance zone, while the 52-week high of $176.41 remains the more important breakout level.

If oil prices remain firm and production growth in Guyana and the Permian continues as planned, a sustained move above $170 could put the previous high back in focus. If oil prices retreat sharply and XOM falls below $155, however, it would suggest that the geopolitical premium supporting the energy trade is beginning to fade, potentially forcing the stock into a longer period of consolidation.

Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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XOM Back Above $160: Are Higher Oil Prices Reigniting Earnings Leverage?

Higher Oil Prices Are Flowing Directly Into Earnings

Guyana and the Permian Continue to Add Low-Cost Growth

Higher Oil Prices Also Raise Market Expectations

$160 Becomes the Near-Term Line in the Sand

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