Big Oil’s Big Wartime Profits

**SPEAKER_1** (0:02)
Bloomberg Audio Studios, podcasts, radio, news.

**SPEAKER_2** (0:09)
Brent crude goes higher, up by 6.6% as we don't get any clarification on the Strait of Hormuz.

**SPEAKER_3** (0:15)
Big drop in oil, apparently a couple of days of a pause between the US and Iran in terms of strikes.

**Sarah Holder** (0:20)
Oil prices have swung wildly since the start of the US and Israel's war in Iran, which has caused major disruptions to key shipping routes in the Middle East, and put pressure on global energy supplies.
After surging in July, prices of Brent crude and West Texas intermediate both fell over the weekend. In response to President Donald Trump's announcement, the diplomatic talks with Iran would start up again this week.

**SPEAKER_5** (0:45)
Oil prices stumble as much as 7% on optimism. The United States and Iran will reach a deal to reopen the Strait of Hormuz.

**Sarah Holder** (0:55)
By this afternoon, prices were bouncing back yet again. After Tehran said talks weren't on, and Trump attacked Iranian leadership on Truth Social.
For oil markets, it's been a volatile time. But for the world's biggest oil companies, this energy crisis has created an opportunity.

**SPEAKER_3** (1:16)
It's big oil's turn now for earnings.

**SPEAKER_6** (1:18)
Most reported massive increases in second-quarter profit as the war drags on.

**Sarah Holder** (1:23)
Exxon and Chevron, the two biggest US oil companies, released second-quarter earnings on Friday, reporting their highest profits in years.

**Mitchell Ferman** (1:32)
The last time they saw profits this big was right after Russia invaded Ukraine.

**Sarah Holder** (1:37)
That's Mitchell Ferman, who covers oil markets for Bloomberg.
European oil majors like Total Energies and Shell had standout quarters too. And all these gains are coming as US consumers face month after month of high gas prices.

**SPEAKER_8** (1:53)
They're quick to increase the prices and slow to lower the prices. They're gouging the American people.

**Mitchell Ferman** (2:01)
I'm getting shafted at the pump.

**Sarah Holder** (2:03)
That's how I feel. That backlash is also coming from the president, who asked the Justice Department in June to look into the gas prices these companies have been charging and said on Monday afternoon he was not happy about those big profits.

**SPEAKER_9** (2:16)
They ought to give some of that back to the public and they better cut the retail price.

**Mitchell Ferman** (2:22)
Ultimately, they are responsible for the world's oil and gas and the world consumes 100 million barrels of it a day. And so, you know, because of how oil and gas feeds through to the economy, that consumers care, politicians care, and so if those prices are out of step, then there's going to be strong reaction.

**Sarah Holder** (2:49)
I'm Sarah Holder, and this is the Big Take from Bloomberg News. Today on the show, how oil companies are profiting off the war in Iran, and why gas prices can stay high, even when oil prices fall.
So Mitchell, I want to start by getting an update on where oil markets stand right now, Monday morning New York time, after the news yesterday that Trump was calling off a strike in Iran and planning on renewing talks this week.

**Mitchell Ferman** (3:19)
Crew prices since the start of the war have been on a roller coaster. They went above $120 a barrel, which is very high. But the oil market's worst fears for decades has been that the Strait of Hormuz is shut. And the Strait of Hormuz has effectively been shut, and oil never reached anywhere near the $200 barrel number that many feared. And part of that is due to Trump kind of signaling to the market that peace was near. And so, as we saw, we started the weekend with the US saying that, you know, there might be some more fighting coming, right? And then we ended the weekend with peace maybe advancing.
So oil then comes off when there's some sort of possible indication that peace is near. And so oil has been in the $80 a barrel range today.
That could change based on the direction of the talks tomorrow.

**Sarah Holder** (4:17)
This tumult in energy markets that you're describing, caused by the Iran War, has been profitable for oil companies. And on Friday, we got a sense of just how profitable when the two biggest US oil companies, Exxon and Chevron, reported second quarter earnings. What did those earnings reveal?

**Mitchell Ferman** (4:36)
Yeah, those earnings revealed one big misconception that this is simply an oil story. It's really a fuel market story. Crude prices have certainly risen during the Iran conflict, but they weren't the biggest driver of earnings. The biggest driver was what happened after crude left the production sites for these companies. Refining margins surged because gasoline, diesel and jet fuel markets became much tighter than crude markets. At the same time, volatility created exceptional opportunities for commodity traders. These large integrated oil and gas companies, particularly the Europeans, have massive in-house commodity trading arms.