From Sheila Dang

HOUSTON, May 1 (Reuters) - U.S. Co. Chevron's first-quarter profit beat Wall Street expectations after it benefited from higher oil prices linked to the U.S.-Israeli war on Iran to boost its exploration and production business results.

The company announced adjusted earnings of $1.41 per share on Friday, significantly exceeding expectations of 95 cents, according to data compiled by the London Stock Exchange Group. Despite these strong results, overall profit hit a five-year low, partly due to the unfavorable timing effects associated with derivatives.

Chevron's exploration and production division, its largest business unit, posted profits of $3.9 billion, up four percent year-on-year, after higher oil prices boosted revenues.

"Despite increased geopolitical volatility and associated supply disruptions, Chevron delivered a strong first quarter performance, underscoring the strength of our portfolio and reflecting the value of disciplined execution," CEO Mike Wirth said in a statement.

The conflict with Iran, which began on February 28, has caused significant disruption in global energy markets. Shipping through the Strait of Hormuz has been almost completely halted, leading to a reduction in supply and a surge in oil prices of up to 50 percent during the first quarter.

Net profit for the period from January to March was $2.2 billion, down from $3.5 billion a year earlier. Chevron's exposure to Middle East unrest remains limited, representing less than five percent of its total production.

Conversely, the company's refining, marketing, and distribution operations swung to a loss of $817 million, after posting a profit of $325 million last year. This decline is primarily due to accounting discrepancies stemming from timing effects related to financial derivatives, which are expected to begin subsiding in the second quarter.

Limited exposure to the situation in the Middle East

Chevron's production has limited exposure to the Middle East compared to its competitors. The company said that production in the United States remained strong, exceeding two million barrels per day for the third consecutive quarter.

Production volumes in the first quarter fell slightly to 3.86 million barrels of oil equivalent per day compared to the previous three months due to the shutdown of the Tengiz field in Kazakhstan following a fire.

The company said that capital spending in the first three months of 2026 was higher than last year, partly due to investments related to its acquisition of Hess, although this was offset by reduced spending in the Permian Basin.