US oil companies stand to receive a windfall of more than $60bn this year if crude prices maintain the levels they have hit since the start of the Iran war.
Modelling by investment bank Jefferies estimates American producers will generate an extra $5bn cash flow this month alone following a roughly 47 per cent rise in oil prices since the conflict began on February 28.
If US oil prices remain elevated and average $100 a barrel this year, the companies will receive a $63.4bn boost from oil production, according to energy research company Rystad.
As Brent crude prices surged past $100 on Thursday, President Donald Trump boasted in a social media post: “The United States is the largest Oil Producer in the World, by far, so when oil prices go up, we make a lot of money.”
West Texas Intermediate, the US benchmark, settled at $98.71 a barrel on Friday.
The extra cash flow should benefit US shale companies, which have limited operations in the Middle East. But the picture is more complicated for the largest international oil companies.
ExxonMobil and Chevron, as well as European rivals BP, Shell and TotalEnergies, have widespread assets in the Gulf and are more affected by the closure of the Strait of Hormuz.
Production has been shut at several facilities in which some of the five “supermajors” have equity stakes, forcing Shell to declare force majeure on liquefied natural gas cargoes they planned to ship from QatarEnergy’s Ras Laffan plant.
The challenges of operating in the region were underlined on Thursday when SLB, formerly known as Schlumberger and the world’s largest oil services company, issued a profit warning.
Martin Houston, an oil industry veteran and chair of Omega Oil and Gas, said: “There are no winners in this situation — and it certainly isn’t the international oil companies. They would rather the status quo from two weeks ago than a crisis that temporarily raises oil prices.”
“National oil companies in the Middle East and their partners will have to rebuild damaged infrastructure. But the real concern is . . . the unprecedented closure of the strait, even for a short period.”
A speedy resolution to the crisis does not appear close. Iran’s new supreme leader, Mojtaba Khamenei, on Thursday said the nation’s military would keep the narrow waterway that carries a fifth of the world’s oil and gas closed as he seeks to build leverage against the US and Israel.
About 18mn of the 20mn barrels of oil that normally pass through the waterway each day remain blocked, according to research by Goldman Sachs. The shock is more dramatic for the LNG industry, with about a fifth of global production halted.
RBC Capital Markets on Friday said it expected the conflict to drag on into the spring and that Brent crude prices could exceed $128 a barrel within three to four weeks.
Rystad’s Thomas Liles said: “The closure of the strait will hurt Middle Eastern national oil companies, while the [western] oil majors — who account for around 20 per cent of total upstream production from Qatar, UAE, Iraq and the neutral zone [the land between Saudi Arabia and Kuwait] — could also see material impacts.”
BP and Exxon are among the most exposed to the Middle East crisis, with more than a fifth of the free cash flow they are expected to generate in 2026 from their global oil and LNG operations based in the region. The equivalent figure for TotalEnergies is 14 per cent while Shell and Chevron are 13 per cent and 5 per cent respectively, according to Rystad.
The supermajors have recently expanded in the region, signing deals in Syria, Libya and several other countries as they seek to boost their oil reserves and grow production.
Total said in a trading update on Friday that a higher oil price “more than offsets the loss of Middle East production”.
Exxon chief executive Darren Woods on Tuesday told the FT the company was adapting to the closure of the “central source of supply for the world”, but said this would hit all players in the industry.
“I think our size and scale has given us some advantage with respect to sourcing . . . We are optimising our operations,” he added.
Analysts said Exxon’s exposure to Middle Eastern supply was a factor in why its shares had lagged behind peers since the crisis began, rising 2 per cent to $156.12. Over the same period BP and Shell’s shares have jumped 11 per cent and 9 per cent respectively, reflecting investors’ belief that European majors’ trading arms would boost profits because of the volatility in oil and gas prices.
“The share price does not just reflect the next quarter or two,” said Bank of America analyst Christopher Kuplent, who noted the market expected oil prices to fall back down to $75 “within the space of months, not years”.
Shares in Norway’s Equinor have risen more than the other western majors since the conflict began because it has no exposure to the Middle East. It is also a major gas supplier to Europe, where prices rose sharply after QatarEnergy suspended LNG deliveries last week.
Other energy companies to have had strong share price moves have been refiners such as Neste and Repsol after supplies of jet fuel and other refined products from the Middle East were cut off.
Liles said: “Any players without too many eggs in the Middle East basket stand to benefit from higher prices.”
Paul Sankey, founder of Sankey Research, said the Middle East crisis would drive a much more aggressive push towards domestic energy sources free from the risk of supply disruption and surging prices.
“This could become a demand destruction event where everyone loses,” he said, noting that some of the worst-hit countries in Asia such as Taiwan could rethink their aversion to nuclear energy.
“The market has been seeing the unprecedented closure of the strait as an aberration whereas oil historians are viewing this as a structural change in the risk of oil,” Sankey said.
