Chevron Corporation (NYSE:CVX, XETRA:CHV) warned that first-quarter earnings will be significantly impacted by commodity price swings tied to the Middle East conflict, prompting UBS to lower its near-term forecasts for the oil major.
The company said it expects adverse impacts of roughly $2.7 billion to $3.7 billion on first-quarter 2026 earnings and cash flow from operations excluding working capital.
About two-thirds of the hit is expected to come from downstream operations, with the remainder from upstream, and nearly all of it concentrated in international segments.
Chevron also projected a working capital outflow of $2 billion to $4 billion for the quarter.
In its upstream business, the company expects higher commodity prices to provide a partial offset, boosting earnings by between $1.6 billion and $2.2 billion compared with the fourth quarter of 2025. However, production is forecast to decline to about 3.8 million to 3.9 million barrels of oil equivalent per day, reflecting downtime at Tengizchevroil and reduced output in the Middle East, including Israel and the Partitioned Neutral Zone.
Downstream results are set to take an additional hit from a litigation-related charge of approximately $350 million to $400 million tied to ceased operations, which Chevron will treat as a special item.
Following the update, UBS cut its first-quarter earnings per share estimate for Chevron to $0.59 from $1.48 previously, well below the current Street expectation of $1.83. The bank now expects cash flow from operations before working capital of about $6.1 billion, alongside a $3 billion working capital headwind.
Despite the weaker near-term outlook, UBS raised its longer-term forecasts, citing stronger oil price assumptions. The bank now expects West Texas Intermediate crude to average $81 per barrel in 2026, up from a prior estimate of $62, and $76 per barrel in 2027.
As a result, UBS lifted its 2026 earnings estimate for Chevron to $8.89 per share from $6.60 and its 2027 estimate to $10.55 from $10.27.
Chevron shares were down about 1.4% on Friday following the update.