BP’s strong first-quarter earnings reveal a widening gap in the fortunes of oil majors as the unprecedented disruption in the Strait of Hormuz pushes crude prices past $100 per barrel and reshapes global energy flows.
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Hormuz Crisis Lifts BP Earnings While Choking 20% of Global Oil Supply
(P1) BP Plc posted strong first-quarter earnings, capitalizing on a surge in Brent crude prices that have rocketed from $60 to over $100 per barrel this year. The gains are a direct consequence of the ongoing crisis in the Strait of Hormuz, a critical chokepoint for nearly a fifth of global oil supply that has been severely restricted amid military conflict.
(P2) "The global crude market has been temporarily cushioned by existing inventories and oil already in transit, masking the severity of the disruption," ExxonMobil Chairman and CEO Darren Woods said in a recent warning. "The unprecedented shock has not yet been fully registered in the market."
(P3) The divergent impact of the crisis was starkly illustrated in first-quarter results. While BP's earnings were robust, rival ExxonMobil reported a slump in adjusted earnings to $4.9 billion, down from $7.7 billion in the year-ago period, despite higher oil prices. Exxon cited a $3.9 billion unfavorable timing effect on derivatives and significant supply disruptions in the Middle East for the weaker performance.
(P4) The disruption is forcing a major recalibration in global energy security, with analysts warning of a delayed but potentially sharper price adjustment in the coming weeks. Should the strait remain restricted, the normalization of supply chains could take one to two months even after reopening, with the need to replenish depleted inventories putting further upward pressure on prices.
A Tale of Two Oil Giants
The first-quarter earnings season has painted a picture of diverging paths for the oil supermajors. BP’s strong results, announced May 2, reflect the partial impact of the oil price spike and its ability to navigate the logistical challenges.
In sharp contrast, ExxonMobil’s performance was muddied by the very crisis lifting the price of its primary product. The company’s global production fell to an average of 4.6 million barrels of oil equivalent per day (BOE/d), down from nearly 5 million in the fourth quarter. Woods highlighted that Exxon’s production in the Middle East could fall by as much as 750,000 barrels per day if disruptions continue. While the company's underlying business remains strong, with CEO Darren Woods noting growth in advantaged assets like Guyana, the Hormuz crisis directly impacted its bottom line by an estimated $700 million due to supply disruptions.
Asia Scrambles for Supply
The impact is reverberating across the globe, forcing major importers to make difficult choices that blur geopolitical lines. Japan, which relies on the Middle East for over 90% of its crude, has resumed imports of Russian oil for the first time since the Ukraine conflict began. A tanker carrying Sakhalin Blend crude is expected to arrive at the Taiyo Oil refinery on May 3.
The move underscores the scramble for alternative sources as vessel movement through the Strait of Hormuz has fallen dramatically. To cushion the domestic impact, Tokyo has intensified the release of its emergency stockpiles, drawing down about 5.8 million kilolitres. Prime Minister Sanae Takaichi has set a goal for Japan to secure nearly 60% of its crude imports through routes bypassing Hormuz in May, turning to suppliers in the United States, Central Asia, and Latin America.
What to Watch
Market observers are closely monitoring for any signs of de-escalation or further entanglement in the US-Iran standoff. Iran’s Speaker of Parliament, Mohammad Bagher Ghalibaf, recently reaffirmed the country's commitment to controlling the strait, a key point of leverage in negotiations. Key indicators to watch include any changes in US military strategy, statements from Iranian officials, and tanker flow data, which will signal whether the supply shock will deepen or begin to ease. The market for WTI Crude Oil Prices in May 2026 suggests an increasing probability of higher prices due to the prolonged tensions.
This article is for informational purposes only and does not constitute investment advice.
[1] The Strait of Hormuz Is Choking the World's Oil Supply. These Stocks Could Win.[2] Oil Prices May Not Have Peaked Yet, Warns ExxonMobil Chairman Darren Woods[3] Japan Turns To Russian Oil Imports As Hormuz Crisis Deepens, First Time Since 2022[4] Iran’s Ghalibaf asserts control over Strait of Hormuz amid US tensions[5] While Oil Prices Skyrocketed in the First Quarter, ExxonMobil's Profits Fell. Here's What Happened.
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