Major oil companies are expected to report significant profits in the second quarter as the ongoing conflict between the U.S. and Iran has disrupted global petroleum shipments and driven up fuel prices. The six-month conflict has severely restricted shipping through the Strait of Hormuz, a critical waterway that previously handled a fifth of the world's oil and natural gas. This supply constraint caused Brent crude prices to surge from around $70 to over $100 per barrel, peaking at $126 at one point. Analysts anticipate elevated profits for publicly traded oil companies, including Exxon Mobil and Chevron, which are set to announce their earnings on Friday.
The financial gains come amid rising fuel costs for consumers worldwide, with gasoline, diesel, and jet fuel prices climbing during the period. Some countries, including Australia, Nepal, and Sri Lanka, have faced fuel shortages, leading to rationing and government office closures. Six of Europe's largest oil companies reported first-quarter profits of $22 billion, a 43% increase from the same period last year, according to Global Witness, a nonprofit focused on environmental issues.
Despite the price volatility, some analysts suggest the market remains cautious about prolonged high prices. JPMorgan analyst Natasha Kaneva noted that investors may be reluctant to price in sustained high oil costs, with prediction markets indicating a 65% chance of WTI crude ending the year at $75 or higher, but only a 32% chance of prices exceeding $90. The recent missile attack by Iranian militants on U.S. forces in Jordan has further complicated the outlook, with some viewing it as a tactic to pressure negotiations or maintain market uncertainty.