Closure of the Strait of Hormuz Doubles Profits of Global Oil Companies

The geopolitical crisis in the Middle East has turned into an opportunity for global oil companies to achieve record profits, as escalating tensions between the United States and Iran disrupted energy flows through the Strait of Hormuz and reduced global supplies, driving up oil and gas prices and directly impacting the performance results of major energy firms.

BP announced on Tuesday that its second-quarter profits more than doubled to $5.73 billion, supported by higher oil and gas prices and strong refining margins, while Chief Executive Meg O’Neill outlined the group’s priorities.

BP’s underlying profits, calculated on a current replacement cost basis for inventory—which is the metric the company uses to compute net income—exceeded the $5.11 billion forecast in a survey of analysts conducted by the company, and rose from $2.35 billion a year earlier. The company also announced it would increase its dividend by 4% to 8.66 cents per ordinary share for the second quarter.

These results came after disruptions in the region hampered navigation through the Strait of Hormuz, one of the world’s most critical waterways for oil and gas trade, fueling supply concerns and pushing prices higher, benefiting producing companies.

BP was not the only beneficiary of the price surge. ExxonMobil announced that its profits doubled to $14.5 billion in the second quarter, while Chevron’s profits jumped 400% to $12 billion, indicating that geopolitical tensions have created a favorable environment for exceptional profits among major global energy companies, despite the pressures they impose on economies and consumers worldwide.

The large profits have drawn political criticism. US President Donald Trump accused major oil companies of making “excessively high” profits in the second quarter of this year, as the White House faces complaints about rising fuel prices amid the conflict with Iran.