The continuing conflict involving Iran is creating a strange situation in the global energy market: oil companies are making much more money at the same time that higher energy prices are putting pressure on consumers and businesses.
Saudi Aramco, ExxonMobil and Chevron are among the major energy companies benefiting from the sharp changes in oil markets caused by the conflict and disruptions to regional supply. Six of the world’s biggest oil companies reportedly made a combined $79 billion in the latest quarter as Brent crude prices moved above $100 a barrel.
Saudi Aramco has been one of the clearest beneficiaries. The company has been able to redirect some exports through its East-West pipeline, reducing its dependence on the Strait of Hormuz, while higher oil prices have increased the value of its production. Aramco’s first-quarter adjusted net income was already $33.6 billion, up from $26.6 billion a year earlier.
But the picture is not as simple for every oil major. Exxon and Chevron initially faced production and shipping disruptions from the conflict, showing that higher oil prices do not automatically translate into higher profits for every company. Their second-quarter results have since benefited strongly from the broader price surge, with the two US giants reporting combined profits of about $26.5 billion.
That difference is important because it shows what geopolitical instability really does to the energy industry: it creates winners and losers depending on where companies produce, how they transport oil and how exposed they are to disrupted routes.
For ordinary consumers, however, the concern is much simpler. Higher crude prices can eventually mean higher costs for petrol, diesel, transport, electricity and goods. Businesses also face higher operating and shipping costs, which can feed into inflation.
And the longer the uncertainty continues, the greater the risk. The IMF has warned that much of the global oil market’s spare capacity and inventory buffer has already been used to absorb the initial shock. A major new disruption could therefore cause a much sharper price reaction than the market has experienced so far.
This is why the situation matters beyond Iran or the oil companies themselves. Every escalation in the Middle East can become an economic problem somewhere else.
For oil producers, instability can mean enormous profits. For consumers, it can mean another increase in the cost of living. The big question now is whether tensions ease before another major supply disruption pushes energy prices even higher.
