The ongoing conflict between the US and Iran has significantly boosted the profits of major oil companies, with refineries seeing skyrocketed returns. The blocking of the Strait of Hormuz, a crucial waterway for about a fifth of global oil and natural gas, constrained supplies and pushed Brent crude prices from approximately $70 to over $100 a barrel, at one point reaching $126. This situation has led to "historically high crack spreads," which represent the profit refineries make from turning crude oil into products like petrol, diesel, jet fuel, and home heating oil.
Chevron reported its quarterly refinery profit was six times higher in 2026, despite processing less crude. The company nearly quadrupled its overall profits to $12.07 billion, a 385% increase, with revenue jumping 56% to $70.06 billion. Exxon Mobil also saw its second-quarter profits more than double to $14.53 billion, up 105%, and its revenue increased by 42% to $116.02 billion, boosted by record diesel production. These companies, especially those with ample refinery capacity, are benefiting significantly from the higher prices of refined products, with jet fuel and diesel prices in the US about 41% higher than before the Strait of Hormuz was blocked.
Refineries in the US are particularly well-positioned to profit as American refineries operate near full capacity. This advantage is amplified by damages to some Middle Eastern and Russian refineries, and reduced oil access for Asian refineries from the Middle East. Experts like Tom Seng from Texas Christian University note that refineries are making "money hand over fist," with potential profits of $50-$60 per barrel compared to an average of $20-$25. Rob Thummel of Tortoise Capital anticipates continued high profits, especially for jet fuel, diesel, and gasoline, due to an under-supplied global refining market and reduced exports from countries like Russia and China.
However, these record profits have drawn scrutiny. Democrats in Congress have introduced bills to tax major oil producers for profits from 2026 onward, with proceeds to be redistributed to consumers. Former President Trump also commented on the situation, stating that Exxon and Chevron made "too much money." The increased cost of fuel, with gasoline prices reaching $4.11 per gallon, up $1 from the previous year, is impacting consumers and could lead to broader inflation as energy costs are embedded in almost all goods and services.
