Exxon Mobil Corporation executives warn that the market has not fully reflected the impact of the closure of the Strait of Hormuz and that there is still room for further increase in oil prices.

Exxon Mobil Corporation (XOM.US) executives recently warned investors that the global oil market has not fully reflected the full impact of the closure of the Strait of Hormuz, and suggested that as commercial inventories reach their lowest operating levels, oil prices may further rise. During last week's earnings conference call, Exxon Mobil Corporation management explained that various factors temporarily buffered the unprecedented oil supply shock caused by the Middle East war - oil in transit, the release of strategic oil reserves, and the consumption of commercial inventories, all helped alleviate the immediate impact in March and April. Exxon Mobil Corporation Chairman, President, and CEO Darren Woods said, "I think most people understand that if you look at this unprecedented impact on the global oil and gas supply, the market has not fully reflected its full impact yet." However, with commercial inventories approaching their lowest operational levels, a key buffer against restricted supply will disappear. Exxon Mobil Corporation expects that as long as the Strait of Hormuz remains closed, oil prices will continue to rise. Market forecasts from trading platform Kalshi suggest a 52% probability of the Strait of Hormuz resuming normal navigation by September 1, while the probability of it reopening by August 1 is approximately 44%. The supply disruption caused by the closure of the Strait of Hormuz has forced global markets to tap into three types of reserve resources simultaneously - commercial inventories, national strategic oil reserves, and the floating storage previously held on tankers. Exxon Mobil Corporation, Chevron Corporation (CVX.US), and ConocoPhillips (COP.US) stated last week that for each day the Strait of Hormuz is blocked, the world consumes more reserve resources. Chevron Corporation CFO Eimear Bonner clearly stated in an interview, "The buffer space is running out," and warned that "if you consider the full impact of this unprecedented supply disruption on global oil and gas supply, the market has still not felt its full impact." According to a research report released by Goldman Sachs Group, Inc. on April 26, daily production of Middle Eastern oil has decreased by 14.5 million barrels, leading to a historic rate of consumption of global crude oil inventories at 11-12 million barrels per day in April. The organization predicts a shift in the global oil market from a surplus of 1.8 million barrels per day in 2025 to a deficit of 9.6 million barrels per day in the second quarter of 2026. Due to the sharp rise in refined oil prices, global crude oil demand is expected to decrease by 1.7 million barrels per day in the second quarter of this year, with a year-on-year average decrease of 100,000 barrels per day in 2026. Analysts added, "The trend of sharply depleting crude oil inventories is difficult to maintain in the long term. If the supply-side impact continues to intensify, the market may face further significant demand contraction." Meanwhile, over the past nine weeks, the U.S. has exported over 250 million barrels of crude oil overseas, becoming the world's top exporter. Against the backdrop of the near halt of the Strait of Hormuz and disruptions in Middle Eastern supply, the U.S. has effectively taken on the role of a key global energy source. However, the rapid increase in export volume has also exposed potential risks. U.S. domestic inventories are visibly decreasing, with total crude and refined oil reserves decreasing for four consecutive weeks and falling below historical averages, while the production side is also facing pressure to maintain output. Some experts warn that the U.S. is digging a hole for itself by depleting reserves, with this supply buffer capacity quickly approaching its limit. If U.S. export capacity has reached its limit, competition for crude oil on a global scale will intensify. Even if the Strait of Hormuz reopens, Exxon Mobil Corporation expects the market to take a long time to adjust. The company predicts a lag time of one to two months between the reopening of the strait and the normalization of market flows, as ships need to be reallocated and backlogged orders cleared. Additionally, the strategic reserves and commercial inventories that have been consumed will need to be replenished, bringing additional demand that could further sustain upward pressure on oil prices. Exxon Mobil Corporation also added that perhaps more importantly, this crisis will reshape the way global energy security is perceived. Countries that have not established strategic oil reserves may begin to do so, as nations reassess their energy vulnerabilities and seek to prevent future shocks, potentially bringing sustained additional demand to the market. Exxon Mobil Corporation's latest performance revealed on Friday showed strong results against the backdrop of high oil prices due to political conflicts in the Middle East. The company's first-quarter revenue was approximately $85.138 billion, higher than the $83.130 billion in the same period last year; adjusted earnings per share were $1.16, higher than analysts' average expectations of $1.00. Benefiting from a 50% surge in Brent crude oil prices in a single quarter, upstream operations, including crude oil operations, increased by 63% quarter-on-quarter in the first quarter. It is worth noting that the adjusted data excludes $700 million in operating losses resulting from goods not being delivered due to the energy market supply disruption caused by the political conflict in the Middle East since late February. Due to the full interruption of goods and trade transport in the Persian Gulf region due to the Middle East war and the paper losses from hedging activities, the unadjusted profit fell to its lowest level in five years GAAP net profit was $4.183 billion, significantly lower than the $7.713 billion in the same period last year. In addition, Exxon Mobil Corporation's first-quarter free cash flow was approximately $2.7 billion, much lower than the $8.8 billion in the same period last year, highlighting the impact of a 20% business exposure to Middle Eastern partners, actual operations, and production being affected by the closure of the Strait of Hormuz and Iranian missile attacks.