Production Down 6%, Profits Cut by $3.7 Billion: Middle East Conflict Hits ExxonMobil Hard

Amid the continued escalation of conflict in the Middle East, oil and natural gas production activities in the Persian Gulf region have largely come to a standstill. U.S. energy giant ExxonMobil reported a 6% decline in its global output in the first quarter compared to the previous quarter, making it one of the most severely affected international energy companies in the conflict.

According to the company’s announcement, about half of the production decline stemmed from its LNG project in Qatar, in which it holds a stake. Two LNG production lines were severely damaged by attacks, leading to a significant drop in capacity.

ExxonMobil stated that the facilities sustained serious damage and that repairs will take considerable time. The company is currently unable to estimate when the two production lines will resume normal operations until on-site assessments are completed.

As a result, the company expects its Energy Products segment to see a $3.7 billion decrease in first-quarter profits compared to the fourth quarter of 2025. This decline is mainly attributed to energy price volatility and mismatches in cargo delivery timing. However, Chief Financial Officer Neil Hansen noted that these impacts are expected to be gradually absorbed as transactions are completed, ultimately resulting in a positive net benefit.

Despite the production setbacks and pressure on downstream operations, rising oil and gas prices have provided some offset for the company’s upstream business. ExxonMobil estimates that higher crude oil and natural gas prices will contribute approximately $2.1 billion and $400 million in additional earnings, respectively, in the first quarter.

On the same day, competitor Shell also released a trading update indicating that its quarterly natural gas production declined due to disruptions caused by the Middle East conflict. Shell’s integrated gas output fell from 948,000 barrels of oil equivalent per day in the previous quarter to between 880,000 and 920,000 barrels per day, representing a quarter-on-quarter decrease of up to 7%. However, the company noted that increased market volatility created better arbitrage opportunities in its oil trading business, partially offsetting the production losses.

As one of the world’s leading LNG exporters, Qatar accounts for about 19% of global LNG exports. Its Ras Laffan LNG hub is the largest integrated LNG facility in the world. The two damaged production lines are located at this hub, where ExxonMobil is a key investor.

Qatar estimates that the incident has taken about 17% of its LNG export capacity offline, resulting in an annual revenue loss of approximately $20 billion. Full restoration may take three to five years.

According to sources, Qatar has invoked a five-year force majeure clause on some long-term LNG supply contracts to countries including China, South Korea, Italy, and Belgium.