Are oil companies profiting from the Iran war? Experts explain

The Iran war triggered a historic oil shock that sent petroleum prices soaring and hammered drivers at the pump. Those sky-high prices, in theory, should have delivered massive profits across the oil industry.

But earnings issued by some of the world's largest oil companies in recent days presented a more complicated picture, as some touted a windfall and others reported a surprising decline in profits.

The conflict, which began on Feb. 28, prompted Iran's effective closure of the Strait of Hormuz, a critical waterway that facilitates the transport of about one-fifth of the worldwide supply of oil. As a result, global oil prices have soared more than 50%.

The British oil company BP more than doubled its profits over the first three months of 2026 compared to the same period a year earlier, calling its performance "exceptional." TotalEnergies, a Paris-based firm, touted a roughly 30% jump in profits over that period, prompting share buybacks and increased dividends.

Chevron, by contrast, saw its profits fall by more than a third over the first three months of this year compared to a year ago, while Exxon's profits plunged by 45% over that time.

Higher prices benefit oil companies, but disparities in performance have hinged on a given company's capacity to take advantage of the price spike by putting oil on the market, all the while avoiding costly delivery shortfalls caused by the war, some analysts told ABC News.

Some firms suffered a hit from financial hedges meant to protect them against a possible price drop, they added. When prices unexpectedly rose, those companies suffered losses.

On the whole, elevated prices present a major opportunity for oil companies, some analysts said.

"You can book a lot higher revenues without necessarily having incurred higher costs," Timothy Fitzgerald, a University of Tennessee professor of business economics who studies the petroleum industry, told ABC News.

Even so, Fitzgerald added: "If you're a company that depends on bringing product through the Strait of Hormuz, your business has been massively disrupted."

The vast majority of oil that passes through the strait is bound for Asian markets. But since oil prices are set on a global market, prices climbed for just about everyone as buyers chase fewer barrels of crude.

A U.S.-Iran ceasefire has entered its fourth week, averting a resumption of wide hostilities while leaving the strait under Iran's effective control. The U.S. has mounted a blockade of Iran's ports in the strait, squeezing a key source of Iranian government funds derived from oil exports, but exacerbating the global petroleum shortage.

Exxon exemplified some of the dynamics posed by the onset of the Iran war.

The Texas-based oil giant reported $4.2 billion in profit over the first three months of this year, marking a 45% drop from $7.7 billion over the same period a year earlier, according to earnings released on Friday.

The company enjoyed "higher prices and margins," but those were "partly offset by higher expenses," Exxon said in a statement, citing a disruption of oil deliveries.

"This quarter demonstrated that ExxonMobil is a fundamentally stronger company than it was just a few years ago, built to perform through disruption and across market cycles. Events in the Middle East tested that strength with the safety of our people remaining our top priority," Exxon CEO Darren Woods said in a statement.

Roughly 15% of Exxon's production has been impacted by the Iran war, Woods told CNBC on Friday.

"If you had to reduce the amount of product that you're selling, you're not going to be able to take advantage of the higher prices," Tom Seng, a professor of energy finance at Texas Christian University, told ABC News.

Exxon also temporarily lost out on billions in earnings as a result of "timing effects" tied to financial hedges, the company said.

Oil companies sometimes take such financial positions to lock in a buyer at a minimum price and avoid pain from potentially volatile price drops. The approach, however, risks losses in the event of an unanticipated jump in prices.

"It's like paying a premium on an insurance policy and you don't end up having to make a claim," Fitzgerald said.

The ill-fated strategy proved costly in the first quarter in part because war-related disruption of deliveries denied the company a $3.9 billion offset from associated oil proceeds, the company said. If Exxon were to have earned that sum, it would have recorded a rise in profits in the quarter compared to a year earlier.

Eventually, the company will take in those billions in earnings when it sells the oil in question, Exxon said.

On Friday, Woods said it would take the company as long as two months to dial up oil flow if the Strait of Hormuz were to reopen.