Exxon Mobil (NYSE:XOM) shares dropped nearly 3% in pre-market trading after Brent crude fell more than 8% to around $90 per barrel, following reports that the United States and Iran had paused military operations over the weekend.
The decline in oil prices came after reports indicated that President Donald Trump was open to renewed diplomatic negotiations, while Iran suspended retaliatory actions and continued discussions with Oman over the possible reopening of the Strait of Hormuz.
Falling crude prices pressure earnings expectations
The easing of geopolitical tensions has significantly reduced the risk premium that had driven oil prices sharply higher this year, prompting investors to reassess earnings expectations for major energy producers such as Exxon Mobil.
The weaker commodity backdrop has clouded the outlook ahead of the company’s second-quarter earnings report, scheduled for July 31.
Previously, Exxon Mobil had indicated that stronger oil prices could lift upstream earnings by between $3.5 billion and $3.9 billion compared with the previous quarter, while improved chemical margins were also expected to support results. However, those projections were made before the latest decline in crude prices.
Analysts had already adopted a cautious stance
Several Wall Street analysts had already taken a more conservative view on Exxon Mobil before the latest drop in oil prices.
Goldman Sachs and Citi both maintained price targets in the $155 to $157 range, suggesting analysts already saw limited upside before the recent shift in the commodity market.
Energy sector under pressure despite broader market gains
The weakness was not limited to Exxon Mobil, with other major oil producers including Chevron and BP also coming under selling pressure as crude prices retreated.
Meanwhile, the broader U.S. equity market moved higher, with gains in the S&P 500, Dow Jones Industrial Average and Nasdaq reflecting improved investor confidence after lower oil prices eased inflation concerns and boosted sentiment toward technology and consumer-focused sectors.
The combination of a sharp reversal in crude prices, cautious analyst expectations and an approaching earnings release has created a more challenging environment for Exxon Mobil. Although the stock has traded between $105.53 and $176.41 over the past 12 months, Monday’s decline highlights how rapidly energy shares can react when geopolitical developments reshape expectations for global oil supply.
ExxonMobil stock price
