Oil producers post higher realized prices amid Strait of Hormuz disruptions
Occidental, ConocoPhillips, EOG, Diamondback and Hibiscus said Strait of Hormuz disruption lifted realized oil prices and cash flow, with OXY reporting $96.78 a barrel and $2.40 adjusted EPS.
The Middle East conflict is driving an unusual earnings boost for oil producers well away from the battlefield, as disruptions in the Strait of Hormuz have pushed crude prices higher and, in some cases, allowed producers to fetch premiums to Brent. Since the U.S. and Israel launched military operations against Iran on Feb. 28, disruptions around the Strait of Hormuz have sharply constrained a waterway that normally carries roughly one-fifth of global oil flows, helping keep crude prices elevated.
Occidental Petroleum Corp. reported a worldwide realized oil price of 96.78 per barrel, up 38% quarter-over-quarter. That fed adjusted EPS of 2.40, versus 0.39 a year ago, and free cash flow of roughly 3 billion. CFO Sunil Mathew said the Middle East situation “is fluid,” while flagging risk tied to international volumes.
ConocoPhillips realized 62.33 per barrel, up 36% year-over-year, even as its Qatar LNG facility was largely shut in during the quarter. CEO Ryan Lance said the Strait bottleneck is “not a resource problem, it’s a connectivity problem,” and has elsewhere argued that gas-market “headwinds have become tailwinds.” Read Also: This 13 Quantum Computing Leader Is EOG Resources posted record adjusted EPS of $5.07 and $2.8 billion in free cash flow. COO Jeffrey Leitzell said operations in Bahrain have been intermittent due to the ongoing conflict, leaving the company with minimal direct war exposure aside from Bahrain.
Diamondback Energy reported the sharpest sequential increase in realized oil prices, which rose to $96.82 per barrel from $73.47 in the first quarter. With essentially zero Middle East production, the company used the cash to lift output past 1 million barrels per day and double its buyback authorization to $16 billion. Hibiscus Petroleum is capturing a premium to Brent. Analysts estimated a roughly 9.6% realized premium in the previous quarter, while management guided for 13%-18%.
April-May offtakes averaged around $120 per barrel. Producers with Middle East assets remain exposed to operational risks, but the earnings backdrop is improving for companies insulated from the Strait. The Energy Information Administration does not expect Middle East oil output to fully normalize until early 2027. Diamondback Energy, EOG Resources, ConocoPhillips, Occidental Petroleum and Hibiscus Petroleum have all advanced since the start of the Iran war as crude prices rise.
Year to date, ConocoPhillips has climbed about 45%, EOG has risen around 43%, Occidental has gained nearly 43.82% and Diamondback is up about 35% on U.S. exchanges. Hibiscus has increased about 50% on the Malaysian exchange, according to data Pro.