Profit for the biggest U.S. oil companies declined in 1st quarter – but only on paper

Profit for the two largest oil companies in the U.S. tumbled during the first quarter, a three-month period in which the price of crude and gasoline rocketed higher. It's a setback on paper only, however, the result of financial hedges that backfired after the U.S. and Israel launched attacks on Iran in late February. Exxon Mobil and Chevron reported quarterly results on Friday, with adjusted profits for both companies topping Wall Street expectations. The shares of both companies, up sharply this week, ticked higher before the opening bell. READ MORE: Key inflation gauge jumps to highest level in 3 years as Iran war spikes gas prices With energy prices depressed at the start of the year, Exxon Mobil and Chevron had arranged hedges to offset volatility, a standard practice in the industry. In the aftermath of an attack by the U.S. and Israel on Iran, however, the physical delivery of oil became impossible with the Strait of Hormuz essentially closed. Exxon and Chevron cannot book gains on those hedges until the crude is physically delivered. The near closure of the Strait of Hormuz off the coast of Iran is a flashpoint in the war and the source of much of