As the military conflict involving the United States, Israel, and Iran stretches into its sixth month, global energy markets are witnessing a stark contrast in fortunes.
Western oil and gas conglomerates are recording historic windfall profits, even as importing nations like Bangladesh and consumers worldwide wrestle with surging inflation, elevated freight costs, and heightened economic distress.
The prolonged crisis has largely halted shipping through the strategic Strait of Hormuz—a maritime choke point that previously facilitated roughly one-fifth of global oil and natural gas shipments.
According to a recent AP report, the resulting supply squeeze drove Brent crude, the global benchmark, from around $70 a barrel to past $100 for much of the spring, briefly touching a peak of $126.
While everyday citizens face mounting utility bills and transportation costs, energy majors have capitalized on the supply deficit.
Banner quarter for US energy majors
According to regulatory filings released on Friday, Texas-based ExxonMobil saw its second-quarter net profit double to $14.53 billion, bolstered by record global diesel yields and quarterly revenue of $116.02 billion (up 42%).
Similarly, Houston-headquartered Chevron saw its quarterly net earnings nearly quadruple to $12.07 billion, with total revenue jumping 56% to $70.06 billion.
Six of Europe's largest oil producers had previously reported aggregate first-quarter profits exceeding $22 billion.
The primary driver behind these record numbers lies in refining margins. Refineries process crude oil into finished products such as diesel, octane, jet fuel, and heating oil.
"The return on refining, on a percentage basis, has skyrocketed," noted Tom Seng, assistant professor of energy finance at Texas Christian University. "Oil right now is priced where it is because of the Iran war. But in the meantime, the refineries are making money hand over fist."
Impact on global south & importing economies
While American refiners operate at near-capacity to offset damaged infrastructure in the Middle East and Russia, net energy-importing nations across Asia and Africa are bearing the operational brunt.
For developing economies like Bangladesh, which rely heavily on imported Liquefied Natural Gas (LNG), refined petroleum, and spot-market crude, the sustained elevation in global benchmark prices presents severe macroeconomic headwinds.
Higher landed costs for fuels directly escalate domestic power generation expenses, raise agricultural irrigation costs during peak seasons, and drive transportation surcharges across supply chains—compounding pressure on national foreign exchange reserves and domestic inflation.
In parts of Asia and Africa, supply deficits have already translated into administrative curbs.
Sri Lanka and Nepal previously instituted temporary office closures to preserve fuel reserves, while Australia experienced localized rationing.
"There are constituencies around the world who are having a very good crisis, and the oil producers are one of them," said Patrick Galey, fossil fuels lead at Global Witness, an environmental investigative watchdog.
"When you compare that to the hundreds of millions of people who are struggling with rolling blackouts, electricity curbs, rationing, or the disruption to fertilizers and the potential impact on food prices, we don't think that it's a justifiable price for the rest of the world to be paying."
Political pushback & windfall tax debates
The widening disparity between corporate earnings and public economic strain has re-ignited intense legislative debate in Washington and European capitals.
US Democratic lawmakers, led by Senator Sheldon Whitehouse and Representative Ro Khanna, have introduced legislation seeking to impose a temporary per-barrel tax on major oil producers and importers that extract or handle at least 300,000 barrels per day.
The proposed tax receipts would be redirected to provide relief to consumers.
"It’s fair to put a windfall profits tax on inordinate windfall profits rather than cut off children’s food programs," Sen. Whitehouse stated, pointing to US retail gasoline prices crossing $4.11 per gallon—up significantly from pre-conflict levels below $3.
However, industry executives argue that targeted taxation deters long-term capital deployment needed to boost supply.
"Penalizing the businesses who stood by those countries and provided that product going forward is very short-sighted," ExxonMobil Chief Executive Darren Woods told investors on an earnings call, citing previous European tax policies as the reason for reduced capital expenditure in that region.
