US-Iran conflict drives oil majors toward record profits

Analysts are expecting major oil companies to report raking in large spring profits while fighting between Iran and the US impeded petroleum shipments and consumers around the world paid more for fuel and confronted shortages.

The conflict, now in its sixth month, halted most shipping through the Strait of Hormuz, a narrow waterway that previously served as a delivery route for a fifth of the world’s oil and natural gas. With global supplies constrained, prices for Brent crude, the international standard, soared from about $70 to above $100 a barrel for much of March, April and May, and at one point reached $126.

That likely resulted in elevated profits for some of the biggest publicly traded oil companies as they sold their goods for higher prices. American oil and gas giants Exxon Mobil and Chevron announced their second-quarter earnings on Friday.

The money oil companies accrued between the beginning of April and the end of June could receive extra scrutiny this year. Gasoline, diesel and jet fuel prices climbed during that period, increasing costs for drivers and airline passengers. Supplies ran low in some countries, leading to sporadic fuel rationing in Australia and government office closures in Nepal and Sri Lanka. Six of Europe’s largest oil companies posted first-quarter profits of USD 22 billion altogether, a total which was 43 per cent higher than the same time last year, according to Global Witness.

“There are constituencies around the world who are having a very good crisis, and the oil producers are one of them,” said Patrick Galey, fossil fuels lead at Global Witness. “When you compare that to the hundreds of millions of people who are struggling with rolling blackouts, with electricity curbs, rationing, waiting in line for food queues, or the disruption to fertilisers and the potential impact that that has on food prices, we don’t think that it’s a justifiable price for the rest of the world to be paying.”