Global oil markets may be underestimating the long-term consequences of the ongoing Iran conflict, according to Exxon Mobil CEO Darren Woods, who warned that the full scale of supply disruptions has yet to be reflected in current pricing. Speaking during the company’s first-quarter earnings discussion, Woods emphasized that while oil prices have remained relatively stable in recent weeks, underlying market conditions suggest stronger upward pressure could emerge if disruptions persist.
At present, U.S. crude prices have hovered near $101 per barrel, while Brent crude has traded around $108. These levels, Woods noted, are more aligned with historical averages than with the magnitude of supply constraints currently affecting global markets.
According to Woods, several temporary factors have helped cushion the immediate impact of the conflict. These include oil tankers already in transit during the early stages of the war, the release of strategic petroleum reserves by governments, and the drawdown of commercial inventories across key markets.
However, he cautioned that these buffers are finite.
“As these supply sources begin to diminish, the market will start to feel the true weight of the disruption,” Woods indicated, adding that sustained closure or restrictions in critical shipping routes could accelerate price increases.
A major point of concern remains the Strait of Hormuz, a vital artery for global energy trade. Any prolonged disruption in this region significantly affects oil and natural gas flows, tightening supply chains worldwide.
Woods further explained that even if the strait reopens in the near term, normalization will not be immediate. Oil flows from the Persian Gulf are expected to take several weeks or potentially months to stabilize. Tankers will need to be repositioned, delayed shipments processed, and logistical backlogs cleared before supply levels return to equilibrium.
Beyond immediate disruptions, the aftermath of the conflict could introduce additional upward pressure on prices. Governments and energy companies will likely need to rebuild depleted reserves and inventories, increasing demand in an already strained market.
Exxon Mobil has also begun to feel the operational impact of the crisis. The company projected a potential decline of up to 750,000 barrels per day in Middle East production if disruptions continue through the current quarter. This represents a significant portion of its global output, with approximately 15% of total production affected by constraints linked to the conflict.
In addition, damage to liquefied natural gas infrastructure in the region has further complicated supply dynamics, highlighting the broader risks posed by geopolitical instability.
Despite the volatility seen in oil prices since the conflict began, with sharp increases followed by declines driven by shifting diplomatic signals Woods maintained that current pricing does not fully account for the scale of disruption.
Market analysts echo this sentiment, noting that continued uncertainty surrounding negotiations and regional security could lead to heightened volatility in the coming weeks.
For now, energy markets remain in a delicate balance supported by short-term supply measures but increasingly vulnerable to deeper structural shortages if tensions persist.
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