Hormuz Blockade Drives Exxon, Chevron to Record Profit Windfall

Exxon Mobil and Chevron are expected to report surging second-quarter profits on Friday, driven by the six-month conflict between the U.S. and Iran that has blocked the Strait of Hormuz and pushed crude prices to levels not seen in years.

Brent crude, the international benchmark, rose from about $70 a barrel to above $100 for much of March, April and May, according to crude oil data. It hit $126 at one point. The Strait of Hormuz, which once carried a fifth of the world's oil and natural gas, has seen most shipping halted.

Six of Europe's largest oil companies posted combined first-quarter profits of $22 billion, up 43% from a year earlier, according to Global Witness, a nonprofit that tracks environmental issues. The second quarter is expected to be even larger.

“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 fertilizers 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.”

Gasoline and diesel prices climbed during the quarter. The average price for a gallon of regular gasoline in the U.S. reached $4.10 this week, about $1 more than a year earlier. Supplies ran low in some countries, leading to sporadic fuel rationing in Australia and government office closures in Nepal and Sri Lanka.

Democrats in Congress introduced bills in March to tax major oil producers on profits from 2026 onward. The tax would apply to companies that produced or imported at least 300,000 barrels of oil per day in 2025. Sen. Sheldon Whitehouse, a Rhode Island Democrat, said the levy would be 50% of the difference between the oil price at the time and the average price per barrel last year. Similar proposals failed in previous years.

“We cracked $4 again per gallon last weekend in gas stations that I drove by, and that’s a big expense, particularly for families that get their income from driving around from job to job in the work van or the work truck,” he said.

Tom Seng, assistant professor of energy finance at Texas Christian University, said refineries are enjoying historically high “crack spreads.” Refineries turn crude oil into gasoline, diesel, jet fuel and home heating oil. In late July, refineries planning to buy a barrel of oil for about $80 were looking at potential profits of $50-$60, compared with the average range of $20-$25.

“The return on refining, on a percentage basis, has skyrocketed,” Seng said. “Oil right now is priced what it is priced because of the Iran war. In the meantime, the refineries are making money hand over fist.”

Companies like Exxon and Chevron, which both extract oil and own refineries, are in the best position to profit, Seng said. American refineries are running at near-full capacity. Some refineries in the Middle East and Russia were damaged, while others in Asia cannot get the amount of oil they used to from the Middle East.

Timothy Fitzgerald, a University of Tennessee professor of business economics, said globally not all refineries have been able to get the crude oil they need. Refineries with ample oil, including those in the U.S., are turning high profits, particularly when they make jet fuel and diesel. Diesel is priced about 41% higher in the U.S. than before the Strait of Hormuz was blocked.

“If you’re a company that owns a bunch of refinery capacity, things look pretty good,” Fitzgerald said.

He added that consumers ultimately pay the price. “Almost everything else we buy has an embedded energy content to it... and this is where you start to worry about it driving increases in costs.”

Fitzgerald said some companies are winners while others are losers. U.S.-based international companies like Exxon or Chevron with production outside the Gulf are selling their product at a higher price. Companies in the Middle East that are struggling to get liquefied natural gas out of the Persian Gulf or have damaged oil fields face a very different outlook.

“Your ability to sell anything and the volume that you may be getting out is so curtailed that your revenues are way down and you’re incurring higher transportation costs and security costs,” Fitzgerald said.

Exxon and Chevron were not as profitable in the first quarter due to the way oil is traded. The first real opportunity to take advantage of higher prices came in April. Companies that had oil stored in floating tankers and available for spot-market trading, including some European ones, were able to benefit from March’s higher oil prices, Seng said.

Exxon Mobil carries an Alpha Score of 57/100, labeled Moderate, on our XOM stock page. Chevron scores 52/100, labeled Mixed, on our CVX stock page. Both sit in the Energy sector.

“It’s fair to put a windfall profits tax on inordinate windfall profits rather than cut off children’s food programs,” Whitehouse said.