Exxon and Chevron combined for $26.6B in Q2 earnings, more than double year-ago. Trump's Oman threat widens risk. A Hormuz peace deal could end the windfall.
Exxon Mobil (XOM) and Chevron (CVX) more than doubled their year-ago profits, combining for $26.6 billion in the second quarter. The Strait of Hormuz, a critical artery for global energy shipments, remains effectively closed, with little tanker traffic moving through the waterway. West Texas Intermediate trades above $82 a barrel and Brent above $88. Before the war, Brent ran at roughly $73.
Second-quarter profit came to $14.5 billion at Exxon, up from $7.1 billion a year earlier; Chevron reported $12.1 billion, against $3.1 billion. Other supermajors have reported profits more than double year-ago levels.
Both companies are integrated producers and refiners. Their income statements combine the price of crude with the price of the gasoline and diesel refined from it, so a geopolitical shock that hits the whole energy chain at once shows up in earnings at every link. Chevron's upstream earnings reached $8.2 billion and its downstream earnings $4.9 billion. Exxon generated $17.2 billion of free cash flow and returned $9.4 billion to shareholders through dividends and buybacks.
The two stocks are each up 33% year-to-date; neither has reclaimed its March peak. AlphaScala's risk scoring puts Chevron at 64/100 and Exxon Mobil at 61/100, both labeled Moderate. Shell sits at 51/100, Mixed.
The same supply shock that built those earnings shows up at the pump. AAA's national average gas price is about $4.06 a gallon, against $3.98 a month earlier and $3.11 a year ago. Gasoline traded below $3 before the Iran war began.
Trump has accused Exxon, Chevron, BP, and Shell of gouging consumers. In June he said gasoline should cost $2.25 a gallon and ordered the Justice Department to investigate potential price gouging. Pump prices are not set by any single company; local competition, regional supply, refining margins, and crude prices all feed the number a driver sees.
Iran continues to threaten shipping through Hormuz, and Tehran is considering a shift to a “fully offensive” posture if diplomacy fails, Reuters reported. Trump has extended the truce repeatedly to give negotiations more time, and has threatened to bomb Oman if it “gets in the way” of peace talks. Oman is a U.S. ally and has been mediating between Washington and Tehran.
The other Gulf states have so far stayed out of the fighting. An attack on Oman would add a new country to the conflict.
If those states start choosing sides, the market would price a supply loss beyond the current Hormuz disruption. Higher crude prices flow straight into upstream revenue. Refining margins hold while product markets stay tight.
The extra crude revenue does not translate dollar-for-dollar into profit; demand can weaken and refining margins can reverse. Brent at about $88 is already well below its $126 wartime peak.
A peace deal that reopens Hormuz would strip the supply premium from oil prices almost overnight, taking much of the earnings windfall with it. The same structure gives that profit back just as quickly when the disruption ends.
Bloomberg reported in July that combined earnings for the five supermajors were on track to be the third-highest in history.
Prepared with AlphaScala editorial tooling from the source reporting linked above. Indexable analysis may include a cited Alpha Score value. Publishing checks screen each story before release. Educational coverage, not personalized advice.