Three oil giants pull in $36 billion as Iran war spikes costs

The three largest publicly traded oil companies in the United States reported combined earnings of more than $36 billion for the current quarter. ExxonMobil led the group with $15.4 billion in profit, a figure that more than doubled compared to the same period last year. Shell followed with $10.8 billion, nearly doubling its prior earnings, while Chevron posted a 180 percent increase to reach $9.9 billion.

The surge in revenue stems directly from the war in Iran, which has disrupted global oil supply. Reduced movement of crude through the Middle East has increased the value of oil produced elsewhere. Brent crude, the global benchmark, now trades around $113 per barrel. Before the conflict began, the price hovered near $70.

Consumer demand for gasoline, diesel, and heating oil has remained steady despite the price jump. People continue to burn fuel for transportation, agriculture, and heating. Dan Pickering, founder of Pickering Energy Partners, noted that U.S. and European producers are selling their barrels at higher prices because Middle Eastern supply is down. He stated that the Middle East's loss generally becomes the gain for oil and gas companies in the Americas and Europe.

Executives told investors that a large portion of these profits is returning to shareholders. Shell executed one of its largest stock buybacks on record. Exxon announced its highest quarterly dividend in company history. However, most of the companies are not spending the cash on new drilling projects. Pickering described the current market as a wait-and-see period. Because high prices are driven by geopolitical events rather than long-term demand, executives are banking the cash to prepare for when prices normalize in 2027.

The supply shock has tangible effects at the pump. AAA reports that gasoline costs approximately $1.20 more per gallon than it did a year ago. Diesel prices hit a record high in September and remain near that peak. Exxon CEO Darren Woods acknowledged the impact on consumers and economic growth. He said his company is maximizing production to help keep prices down. Chevron CEO Mike Wirth agreed, stating the company is focused on helping consumers get the most from their systems.

Oil executives warned that the situation will not resolve quickly. Shell CEO Wael Sawan said he initially viewed the price spike as temporary. However, the prolonged war has drawn down global reserves. The U.S. Strategic Petroleum Reserve is at low levels, and Europe has released some of its stored crude and diesel. Sawan explained that inventory levels are being drawn down quickly, and it will take considerable time to refill those stocks.

Democratic lawmakers in both chambers of Congress are calling for a windfall tax on excess profits. Bills introduced this spring would return some of that revenue to Americans via tax rebates. Senator Sheldon Whitehouse of Rhode Island, who sponsored a Senate bill, said the measure would also highlight the cost competitiveness of renewable energy. Economist Isabella Weber of the University of Massachusetts Amherst argued that such taxes bridge the gap between corporate profits and consumer costs. She noted that record profits during a supply crisis create a contradiction in how the economy is organized.

Exxon CEO Darren Woods previously called windfall taxes a misguided policy that penalizes successful companies. The Trump administration has taken steps to lower fuel prices, including temporarily loosening rules for dyed diesel used in farming and lifting sanctions against Russia. These measures are unlikely to lower U.S. prices before the midterms, as Russian diesel releases represent a small portion of U.S. demand, and dyed diesel remains inaccessible to most drivers.