Big Oil cashes in on Iran war as Trump demands price cuts

Major US oil companies are on track to post record profits from the Iran war launched by President Donald Trump, raising the prospect of a direct clash with an administration that has repeatedly accused energy firms of price gouging.

ExxonMobil and Chevron are expected to report second-quarter net profits of $15 billion and $9.7 billion, respectively, later this month, according to the Financial Times on Thursday — more than triple their earnings from the previous quarter.

Refiner Marathon is also expected to post its biggest profit since 2022, when Russia's full-scale invasion of Ukraine triggered a global inflation surge, according to data aggregator FactSet. Valero is likewise forecast to deliver strong results. Major shale producers including ConocoPhillips and Occidental Petroleum are expected to record sharp profit gains on the back of rising crude prices.

US companies have seized on the supply shortage to expand crude and refined-product exports to record levels. Iran's blockade of the Strait of Hormuz — a consequence of the war — has halted Gulf region exports that account for roughly 20 percent of global demand. Crude, diesel and jet fuel prices have surged, with crude briefly topping $100 a barrel since the war began.

Analysts say the profit windfall could trigger a political backlash in Washington. Average US gasoline prices stand at $3.80 a gallon, up about 25 percent from a year ago, while diesel has climbed 30 percent to $4.80 a gallon, according to the American Automobile Association. Fuel inflation is rippling through the broader economy — from airfares to groceries — as higher transport costs pass through the supply chain.

Trump has directed the Justice Department to investigate whether energy companies are engaging in price gouging, with midterm elections just months away in November. He also warned on his Truth Social platform: "Gasoline retailers must lower their prices immediately. If they don't, big trouble is coming."

"Investors will see profits, but the government will be furious," said Kevin Book of ClearView Energy Partners. "It's the war that caused the price increases, not the industry." Tensions with the administration could deepen further, analysts say, as companies are reaping windfall profits from high oil prices while resisting White House calls to expand new drilling.

International oil prices briefly fell after the United States and Iran signed a memorandum of understanding to end the war, but have since surged again following a resumption of airstrikes, fueling expectations that elevated prices will persist. "There is a massive disconnect between refined product prices and crude prices," said Karl Larry, an analyst at energy consultancy Enverus. "With refining capacity constrained, the rally in refined product prices will continue for some time."

Russia is adding to the pressure. Ukrainian drone strikes have battered Russian refining facilities, triggering the worst fuel crisis since the collapse of the Soviet Union and prompting Russia — the world's second-largest diesel exporter — to ban diesel exports.

A tighter global diesel supply could hand Big Oil companies that produce the fuel — essential for industry and agriculture — another round of outsized gains. "When there is volatility, prices carry a premium," said Ed Hirs, an energy fellow at the University of Houston. "Uncertainty has a cost."