I have covered the energy market’s evolution through the Iran-Iraq War, from Chevron CEO Mike Wirth's early warnings about depleting buffers to Shell’s CEO describing the diesel and gasoline squeeze that emerged as refineries pivoted to jet fuel.
On July 31, ExxonMobil (XOM) Chairman and CEO Darren Woods also added the most analytically precise observation I have heard from an oil executive.
There is a disconnect between crude prices and pump prices. And until that disconnect closes, Americans should not expect relief at the gas station, no matter what happens to WTI crude.
“That’s one of the reasons why we haven’t seen crude rise as quickly as people have thought, or we didn’t see product prices fall as crude prices came down.”Woods said on CNBC’s Squawk Box.
XOM closed the month at $155.44, according to Yahoo Finance, up 30.91% year-to-date and 43.67% over the past year. Also, the same day, the company reported Q2 2026 earnings of $14.5 billion and $17.2 billion in free cash flow.
What Exxon’s CEO actually said
Woods framed the disconnect with the authority of someone who has 35 years in the refining business, and the explanation deserves a careful read.
Historically, refineries always had excess supply, Woods said. That meant pump prices tracked crude prices closely, because crude was the dominant cost input and refining was never the binding constraint. When crude fell, gasoline fell. When crude rose, gasoline followed.
Woods continued to explain. “Pump prices are being established by the supply and demand of refined petroleum products, not crude.”
The Iran war and the closure of the Strait of Hormuz disrupted Middle Eastern refined-product exports simultaneously with crude exports. Global refineries scrambled to fill the gap.
Shell’s CEO described the same dynamic in my previous coverage: that refineries pivoted to maximum jet fuel production at the expense of diesel and gasoline. Now the diesel and gasoline shortfall shows in retail pump prices even as WTI crude has not risen proportionally.
The EIA data concretely confirms Woods’s framing. For the week ending July 24, WTI crude was $91.74 per barrel, up $8.31 week-over-week, according to the EIA Weekly Petroleum Status Report.
But on-highway diesel retail prices averaged $5.313 per gallon, $1.508 more than one year ago. Regular gasoline averaged $4.096 per gallon, up $0.973 year-over-year. The spread between crude prices and fuel prices tells the same story Woods described.
What needs to happen before pump prices fall — Woods’s forward guidance
Woods was equally direct about the resolution mechanism when asked where gas prices are headed.
“One of the things that’s going to have to happen is we’re going to have to get capacity restored and back into the marketplace, either by opening the strait and getting product flowing through there, and by China bringing additional exports into the marketplace to reestablish the link between pump prices and crude,” he said.
“My expectation would be that you’d see some of that crude price begin to rise. But until you get flows established in resupplying the marketplace, I think we’re going to continue to see prices consistent with what we’re now experiencing for quite a while.”
Remember, all of that is coming from a CEO with global visibility into energy flows telling consumers and policymakers: do not wait for crude to fall and expect gasoline to follow.
The product market will govern until supply normalizes. And supply will not normalize until either the Strait reopens or China accelerates refined product exports into global markets.
ExxonMobil’s Q2 results show execution through disruption
The financial results before Woods’s commentary were notable, too.
Q2 2026 earnings reached $14.5 billion, or $3.48 per share
Adjusted earnings were $14.7 billion, or $3.52 per share
Cash flow from operations was $23.6 billion
Free cash flow reached $17.2 billion
The company returned $9.4 billion to shareholders, including $4.3 billion in dividends and $5.1 billion in buybacks.
Upstream production also hit its highest level in more than two decades, excluding disruptions in the Middle East. Permian production set another record, consistent with the 9% compound annual growth rate planned through 2030.
Record second-quarter diesel production was achieved. The fifth Guyana FPSO set sail for its Q4 2026 production startup. Cumulative structural cost savings reached $16.3 billion, more than those of all other international oil companies combined.
“The second quarter was shaped by disruption, but defined by execution,” Woods said in the earnings release. Q3 dividend was declared at $1.03 per share, payable September 10, 2026.
My take is that the combination of record upstream production, record free cash flow, aggressive shareholder returns, and a CEO who has provided the clearest explanation of the pump-price disconnect anyone has offered this cycle makes XOM one of the more straightforward energy investments in the current environment.
The refinery constraint Woods described is a problem that enriches integrated operators with refining and trading capabilities. And Exxon has both.
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