U.S. oil prices traded around a three-month high Monday after U.S. service members were killed in what the U.S. claims was an Iran-backed militia drone strike on one of its bases on the Jordan-Syria border over the weekend. Meanwhile U.S. supermajors Exxon Mobil and Chevron prepared to close the door on 2023 with earnings reports Friday. XOM angled higher Monday.
West Texas Intermediate (WTI) oil prices dropped below $78 per barrel Monday after surging more than 6% last week. Brent crude, the international benchmark, traded below $82 per barrel after also reaching a three-month high.
Investors are closely monitoring the Middle East after the White House blamed a drone attack that killed U.S. troops in Jordan on Iran-backed militants. President Biden, who has attempted to avoid broadening the Israel-Hamas war, has signaled that the U.S. will respond to the attack.
What Do The Exxon Mobil And Chevron Deals Say About The Oil Industry's Future?
U.S. Republican politicians over the weekend called for military action against Iran. Oil markets braced for a possible a revival of sanctions against Iranian oil exports. Current estimates on Iranian exports range between 1 million and almost 2 million barrels per day.
WTI prices trading around $78, up from below $70 in early December puts them at the best level since early November. Investors appear to be placing more emphasis on U.S. demand recovery and possible constraints from the loss of exported Iranian oil, or oil shipped through the Red Sea — most of which has so far been unaffected.
If Iran's exports are taken off the international oil market, it would leave a hole that could add about $10 to oil prices, according to analysts.
The recovery in oil prices also comes ahead of Exxon Mobil and Chevron reporting fourth-quarter earnings and revenue this week.
Exxon Mobil stock gained 0.17% while Chevron dropped a fraction Monday during market action. CVX shares gained 4.9% to 149.14 last week while XOM jumped more than 6% to 103. Ahead of Monday's starting bell, Exxon Mobil stock is up 3% in January while Chevron stock has dropped a fraction.
Exxon Mobil Stock: Energy Giants To Report
Wall Street predicts Exxon full-year EPS will fall 34% to $9.27 with sales declining 15% to $348.17 billion. Meanwhile, analysts expect Chevron 2023 earnings to dip 30% to $13.14 per share with revenue down 14% to $202.62 billion.
Investors Await Presidential Election Result For Clean-Energy Stock Clarity
Both Exxon Mobil and Chevron saw profit and revenue declines throughout 2023, as oil and natural gas prices weakened vs. prior-year levels driven higher by Russia's invasion of Ukraine.
Chevron and Exxon Mobil enter 2024 after making mega deals in the latter part of 2023. Exxon Mobil significantly expanded its Permian Basin holdings when it paid $60 billion for Pioneer Natural Resources in October. Chevron quickly followed up with its $53 billion purchase of Hess, bolstering its share of Bakken Shale assets in Montana and North Dakota, as well as an Exxon-led project offshore from Guyana.
What's In Store For Exxon Mobil And Chevron In 2024?
For 2024, the supermajors have set out cautious capital spending and production targets. However, Chevron appears set to increase oil output while XOM plans steady production, while leaning on recent acquisitions for growth.
Please follow Kit Norton on X, formerly known as Twitter, @KitNorton for more coverage.
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