"Exxon Mobil (XOM) is expected to benefit from strength in upstream and refining in Q1, though chemicals may weigh on results, RBC Capital Markets said in a note Tuesday.

RBC forecast Q1 chemicals earnings at $224 million, citing margin pressure from higher feedstock costs. The firm noted that Exxon's early April trading update pointed to solid indicators in upstream and refining, supported by favorable timing effects. However, the chemicals segment remains a drag, performing below market expectations.

Visible Alpha consensus puts Q1 adjusted earnings at $1.75 per share, slightly ahead of RBC's estimate of $1.70. Consensus for cash flow from operations, excluding working capital, stands at about $14.5 billion, above RBC's forecast of $13.8 billion.

Looking beyond the quarter, RBC warned that Exxon's US chemicals business could face "material downside revisions" in 2025 and 2026 due to tariff-related risks and weaker demand. Visible Alpha's current consensus estimates for chemicals earnings are $2.1 billion for 2025 and $3.2 billion for 2026.

RBC also said it does not expect Exxon to announce any major final investment decisions during Friday's earnings call, including for the Baytown hydrogen project, citing an increasingly uncertain policy environment. Most of the company's low-carbon plans, outlined in December 2024, are contingent on supportive policy frameworks.

Exxon is scheduled to report Q1 results on Friday, May 2.

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