U.S. Oil Giants See War-Driven Profit Surge, Warn Prices Will Stay High

Amid the Middle East conflict, U.S. oil giants ExxonMobil and Chevron have reported strong earnings, but executives have simultaneously warned that persistently high gasoline prices could continue to pressure consumers.

According to AFP, the significant profit growth at these two oil majors highlights how financial gains from supply disruptions during U.S.-Iran tensions have easily outweighed any negative impacts on the companies.

ExxonMobil, the largest energy company in the United States. (AP)

ExxonMobil's second-quarter profit more than doubled to $14.5 billion, while Chevron's profit reached $12.1 billion—over five times the figure from the same period last year.

However, gasoline prices remain above the psychological threshold of $4 per gallon, posing a potential political risk for President Trump ahead of the U.S. midterm elections.

Although crude oil prices remain relatively high, top executives from both oil giants emphasized that Iran's near-blockade of the Strait of Hormuz has led to factory shutdowns or reduced production, resulting in diminished refining capacity.

When asked when gasoline prices might fall, ExxonMobil CEO Darren Woods told U.S. financial media CNBC: "I wouldn't hold out much hope in the short term."

Woods said: "I believe we will continue to see prices at current levels for a long time to come." He pointed out a "decoupling" between crude oil and gasoline markets, which differs from long-term trends.

"We need to reopen the Strait of Hormuz, and then we need to replenish inventories and get everything running again," Woods added.

A real-time fuel price display at a gas station in California, USA. (AP)

Chevron CEO Mike Wirth noted that gasoline inventories are becoming scarce, part of a broader shortage of refined products, with aviation fuel and diesel similarly affected.

"We will see continued upward pressure on product prices through the third quarter and beyond," Wirth told analysts during a conference call.

ExxonMobil's revenue rose 42% to $116 billion, citing rising oil prices as one factor boosting profits, while emphasizing a significant expansion in refining margins.

In a prepared statement, ExxonMobil said refining margins—the profit from products like gasoline after subtracting crude costs—"hit a record high this quarter," noting that global refining capacity has dropped by nearly 9% due to war-related operational disruptions.

In addition to supply losses from the Strait of Hormuz, Woods cited reduced fuel exports from China and damage to Russian refining capacity due to attacks by Ukraine as contributing factors.

Woods also mentioned during an analyst call that while the U.S.-Iran conflict has largely benefited ExxonMobil, damage to a key liquefied natural gas (LNG) facility in Qatar has reduced output.

Woods predicted that even after the Strait of Hormuz reopens, it will take "some time" for shipping operators to regain confidence in safe passage, further exacerbating market supply tightness.