Key Takeaways
- Brent crude fell 8% on Nov. 2 after Iran signaled it was open to peace talks and President Trump posted that Iran wants a settlement.
- PIMCO CEO Manny Roman says a full peace deal with Iran would cut oil prices by 40%, which would put Brent below its 2025 average.
- Analysts expect ExxonMobil to earn nearly twice as much per share in 2026 as in 2025, and Chevron’s quarterly free cash flow has jumped far above anything it made in 2024 or 2025.
- ExxonMobil trades near its usual multiple even though its earnings are inflated by the war, so neither stock looks like a buy until oil’s path is clearer.
The Iran war-driven spike in oil prices has been good for ExxonMobil (XOM) and Chevron (CVX) shareholders. Both stocks are up 45% so far this year.
Now the White House says the war could be ending.
On Nov. 2 (yesterday), President Donald Trump posted that oil prices were “DROPPING LIKE A ROCK” because “people feel that there will not be a War with Iran. Iran wants a settlement, as soon as possible. It could happen!”
Brent crude closed down 8% yesterday at $104.77 a barrel. (It’s about flat today.) The drop came after Iranian President Masoud Pezeshkian said the country’s supreme leader had given his government authority to hold peace talks. Two days earlier, Treasury Secretary Scott Bessent posted that “The Strait of Hormuz transit levels are back to pre-conflict levels minus Iranian barrels.”
PIMCO CEO Manny Roman then put a number on what a real deal would mean. On Bloomberg Talks, he was asked whether next year could be the year of the bond market. Roman said that “if tomorrow morning we announce a full and substantive peace treaty with Iran where there’s free circulation of gas after three months, oil will be 40% lower.”
For two stocks riding $100-plus oil, that’s a big number.
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Analysts expect years of fat earnings
Analysts expect Exxon to earn $13.69 a share in 2026 on a normalized basis. That’s nearly double the $6.99 it earned in 2025, when Brent averaged $69.06 a barrel. Their estimates come down after 2026 but stay well above 2025’s level:
Even 2028’s $10.23 is 46% more than Exxon earned last year.
Now set Roman’s number against that. Forty percent off Brent’s Nov. 2 close is about $63 a barrel, below the 2025 average. Exxon’s annual report estimates that every $10 change in Brent is worth about $7 billion of yearly earnings, or roughly $1.70 a share.
Exxon’s growth in the Permian and Guyana would win back some of that. But at $63 oil, I have a hard time seeing Exxon earn the $12.01 a share analysts expect for 2027.
Chevron’s cash flow shows how quickly these businesses move with oil. Its free cash flow stayed between $1.26 billion and $5.62 billion a quarter through 2024 and 2025. It then hit $18.1 billion in the June quarter of 2026 and $12.0 billion in the September quarter:
Brent averaged $97 in the third quarter, up from $69 a year earlier. In that year-earlier quarter, Chevron’s free cash flow was $4.94 billion.
Investors are paying a normal multiple
Exxon trades at 12.6x forward earnings, just under its five-year average of 12.8x:
That’s an ordinary multiple for earnings that analysts already expect to shrink. The last time oil spiked, investors were far less generous: in July 2022, Exxon’s forward P/E hit its five-year low of 6.6x.
Nothing’s signed, and Exxon can afford to wait
A settlement isn’t a sure thing, though. Brent is still above $100 (if only just), and Raymond James analyst Pavel Molchanov told Reuters that skepticism is warranted after many “false dawns” over the past several months.
Exxon’s shareholder payouts don’t depend on wartime prices, either. The plan it laid out last December has it producing $145 billion of surplus cash through 2030 with Brent at $65, and it plans $20 billion of buybacks in 2027. On its Oct. 30 call, CEO Darren Woods was asked about $60 oil. He said the company is “not going to ever cut our dividend.”
Bottom line: Exxon’s dividend looks safe, but I wouldn’t buy either stock after a run like this. Exxon and Chevron are priced for wartime oil, and the White House is openly pushing for a deal that Roman thinks would knock 40% off oil prices.
Talks like these have stalled before, so watch Qatar’s mediation. Also watch Exxon’s 2027 outlook: it plans to reaffirm it in a press release later this quarter and give more detail on its fourth-quarter call in late January.
So what is ExxonMobil stock actually worth?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
