Big Oil poised for record profits as fuel prices surge amid Middle East turmoil

Five of the world’s largest oil companies are on track to post their third-highest quarterly profits ever, with combined earnings estimated at $45.8 billion, as geopolitical tensions and supply disruptions sent crude prices and fuel margins soaring. Analysts attribute the windfall to the Iran war, which effectively closed the Strait of Hormuz at the end of February, cutting off vast quantities of crude and refined products from the Persian Gulf. The resulting supply squeeze pushed crude prices above $120 a barrel in late April, though they later eased slightly. However, gasoline, diesel, and jet fuel prices remained elevated, keeping refining margins historically strong. The five supermajors—ExxonMobil, Chevron, BP, Shell, and TotalEnergies—are expected to report their biggest refining profits in years, with ExxonMobil leading due to heavy investments along the U.S. Gulf Coast. European majors like BP, Shell, and TotalEnergies also benefited from increased trading opportunities amid market volatility. Analysts highlight that refining margins have grown even stronger since the end of the quarter, with RBC Capital Markets’ Biraj Borkhataria calling refining a “material tailwind” for second-quarter earnings. The market upheaval created by the Iran war forced buyers to seek replacement barrels, particularly from the U.S., while Ukrainian attacks on Russian fuel plants further tightened supplies, driving refining margins to record levels. “If you look at oil prices plus refining margins, then we are close to the highs at the time the Russia-Ukraine war started,” Borkhataria noted. The surge in profitability is reflected in the companies’ share performance, with TotalEnergies up more than 30% this year, BP and Shell gaining over 20%, and the two U.S. majors rising about 25%. However, the windfall is likely to fuel political backlash, as U.S. gasoline prices again exceed $4 a gallon and President Donald Trump orders the Justice Department to investigate pump pricing ahead of midterm elections. Analysts warn that structurally higher prices for jet fuel, diesel, and other distillates could persist for years, stoking global inflationary pressures. James West of Melius Research predicts crude will average $80 to $90 a barrel for the rest of 2026, though Brent currently exceeds that range, averaging $96.79 in the second quarter. The geopolitical risks remain high, with crude prices rising again this month as Middle East tensions escalate.