Middle East war boosts oil giants’ profits as 'households pay the price'
Oil giants have posted "exceptional" profits as war in the Middle East drives up crude prices, fuels global supply fears and creates trading opportunities – handing some of the world's biggest energy companies a financial boon while consumers face rising costs.
French gas giant TotalEnergies posted a 51 percent jump in first-quarter net profit to $5.8 billion on Wednesday, the latest sign of how war-driven oil shocks are boosting the world's biggest energy companies.
A day earlier, British company BP said its underlying profit had more than doubled to $3.2 billion, lifted by what it called “exceptional” oil trading as Gulf turmoil sent prices higher.
With London-based Shell and US oil majors ExxonMobil and Chevron due to report in the coming days after signalling stronger conditions, the scale of the industry's windfall is only beginning to emerge.
Conflict in the Gulf has rattled one of the world's most important oil-producing and transit regions, especially around the Strait of Hormuz, pushing prices higher across global markets as fears over disrupted supply spread far beyond the war zone.
Because oil is priced globally, companies producing in places such as the North Sea, Brazil or the United States can benefit from those rising prices even when their own infrastructure remains far from the fighting.
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War and windfall
With production costs often staying broadly stable, much of that extra revenue turns directly into profit. For major producers, even small jumps in oil prices can mean hundreds of millions of dollars in additional earnings.
Soaring gas prices have revived debate in Europe over whether to tax windfall profits made on high oil prices. In early April, French Prime Minister Sébastien Lecornu said he had “no objection in principle” to such a move.
Growth in production in Brazil, Libya and Australia helped TotalEnergies offset losses in the Gulf region, which normally accounts for 15 percent of its oil and gas business. Its overall oil and gas production rose 4 percent in the quarter, while liquefied natural gas shipments climbed 12 percent.
The company said its results also reflected its “ability to capitalise on rising prices”.
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When volatility pays
Market turmoil has created another major source of income: volatility itself. The world's biggest oil firms do not just pump crude, they also trade it – buying, selling and storing oil as prices move rapidly with military strikes or diplomatic announcements.
That business has become central to the latest profit surge, allowing companies to make money not only from higher oil prices but also from sudden market swings.
The Financial Times last month reported that TotalEnergies earned more than $1 billion by buying almost all available exportable oil cargoes in the Middle East, while US-Israeli attacks on Iran shut the Strait of Hormuz and sent prices soaring.
TotalEnergies also partially restarted its Satorp refinery in eastern Saudi Arabia in mid-April, after air strikes forced it to shut down earlier that month. The company raised its dividend to €0.90 per share from €0.85, while BP maintained its quarterly dividend.
The booming profits have drawn criticism from climate groups and renewed scrutiny over who bears the cost of conflict-fuelled energy shocks.
“TotalEnergies' war profits highlight our persistent dependence on fossil fuels, whose soaring prices once again benefit shareholders at the expense of consumers,” Antoine Bouhey, campaign coordinator at Reclaim Finance, told French news agency AFP.
Greenpeace France denounced what it called a “cynical logic” while “households pay the high price at the pump".
(with newswires)