Big Oil profits surge amid the Middle East conflict
The conflict in the Middle East has triggered one of the most significant oil market shocks in recent history, delivering substantial financial gains to major oil companies. Since the war began on 28 February, Iran’s effective closure of the Strait of Hormuz has contributed to a rise of more than 50% in global oil prices, generating exceptional earnings across much of the industry. With oil inventories at historically low levels, prices are expected to remain elevated in the coming months.
The war launched by the United States and Israel against Iran has developed into a prolonged, low-intensity regional conflict. Attacks on energy infrastructure, refineries and shipping routes have severely disrupted global energy markets, increasing the geopolitical risk premium embedded in crude oil prices. This additional cost could persist even after hostilities end.
“Given recent developments in the Middle East, the relentless rise in fossil fuel prices and the significant increase in the cost of living, it is necessary to mitigate the negative consequences for citizens, and energy companies must be taxed to compensate households for their losses.”
These were the words of Ireland’s Minister of State for European Affairs, Thomas Byrne, speaking during a plenary session in Strasbourg on behalf of the EU Council Presidency, as reported by ANSA, during a debate on windfall taxes on energy companies.
“It is necessary to adopt containment measures, such as compensation and emergency mechanisms, and we know that taxing windfall profits is a necessary measure,” Byrne added.
How much are Big Oil profits expected to reach?
How substantial are the financial gains recorded by the world’s largest oil producers?
According to estimates from RBC Capital Markets, the combined profits of the five largest Western oil companies, BP, Chevron, Exxon Mobil, Shell and TotalEnergies, are expected to reach approximately $53 billion in the third quarter of 2026.
That would represent an increase from the $48 billion recorded in the second quarter and roughly double the earnings reported during the same period in 2025, according to Reuters.
British oil company BP more than doubled its profits in the first three months of 2026 compared with the corresponding period a year earlier. Paris-based TotalEnergies reported an increase of almost 30% over the same period.
Meanwhile, Shell expects its refining margins to reach $42 per barrel in the third quarter of 2026, an all-time high and a substantial increase from the $24 per barrel recorded in the previous quarter.
As Reuters notes, Shell’s refining margins stood at just $12 per barrel a year earlier.
The company’s results from its gas and oil products businesses are expected to remain broadly in line with the previous quarter, when Shell recorded its second-highest quarterly profit on record.
These figures illustrate how rising crude prices have supported Big Oil profits, although the financial benefits of the energy crisis have not been distributed evenly across the industry.
The downside of financial hedging for oil companies
Not every major oil producer has benefited equally from the surge in crude prices.
Chevron’s profits reportedly fell by around one-third in the first three months of 2026 compared with the same period a year earlier, while Exxon Mobil recorded a decline of approximately 45%.
As analysts explained to ABC News, some companies suffered significant financial losses because of hedging strategies originally designed to protect them against falling oil prices.
When crude prices rose unexpectedly, those financial arrangements generated losses.
Hedging is intended to make future revenues more stable and predictable by locking in prices in advance. However, the same mechanism can limit the financial benefits of an unexpected increase in market prices.
For example, if crude oil rises to $100 per barrel, an oil company may sell its physical production at the higher market price while simultaneously having to pay the difference to settle a hedging position tied to a previously agreed price.
The result is that part of the additional revenue generated by higher oil prices is offset by losses on financial contracts.
Nevertheless, despite the uneven impact of hedging strategies, the overall rise in crude oil prices has benefited major oil companies, reinforcing the exceptional earnings generated by the Middle East energy crisis.