US-Iran Conflict Drives Oil Prices Higher, Boosting Profits for Major Companies
The ongoing US-Iran conflict has led to a surge in oil prices, benefiting major oil companies such as Exxon Mobil and Chevron. The Strait of Hormuz, a narrow waterway that accounts for a fifth of global oil shipments, was blocked due to the conflict. As a result, Brent crude prices soared from $70 to over $100 per barrel, leading to higher profits for oil companies.
According to Global Witness, six European oil majors posted a 43% increase in first-quarter profits to $22 billion, compared to the same period last year. This is despite the fact that oil companies do not set US oil prices, which are driven by supply and demand.
The conflict has also led to shortages and price increases for gasoline, diesel, and jet fuel. In the US, gasoline prices reached $4.10 per gallon in mid-April, up from below $3 before the conflict began. Refineries, including those owned by Exxon and Chevron, are enjoying historically high 'crack spreads', which measure their profits based on oil and product prices.
Tom Seng, an assistant professor of energy finance at Texas Christian University, said that refineries are making 'money hand over fist' due to the conflict. However, not all oil companies benefit equally; those in the Middle East struggle to export oil and gas due to damaged facilities and transportation costs.