ExxonMobil and Chevron Cash In on Iran War Oil Price Spike

The Iran war has brought significant profits to ExxonMobil and Chevron, with both companies reporting record-breaking earnings in their second-quarter reports. The conflict has disrupted global oil supplies, driving up prices and benefiting the two energy majors.

Chevron posted its largest quarterly profit ever, while Exxon's net income surged due to upstream volumes running at near-maximum capacity as Brent crude averaged above $100 a barrel through most of June and July. The price spike was driven by the Strait of Hormuz disruption, which has kept the premium embedded in the forward curve.

The earnings reports come as American gasoline prices have averaged above $4.50 a gallon nationally in July, with Senate Democrats introducing windfall profits legislation twice this session. The companies' executives pointed to the persistent nature of the disruption, citing the Houthi dimension and the simultaneous pressure on both the Hormuz and the Bab al-Mandeb.

The Federal Reserve held rates steady again Thursday while Exxon and Chevron counted their gains, managing the same crisis from different positions. For the oil majors, the crisis is a revenue event, while for the Fed it is a policy constraint. The earnings reports cannot answer when the premium ends, but they do highlight the significant impact of the Iran war on global energy markets.