Hormuz Crisis Drives Big Oil to Record $48B Profit as Diesel Soars

How the Hormuz Blockade Sent Pump Prices Spiking

Global oil markets are still grappling with the fallout from the closure of the Strait of Hormuz, the chokepoint through which about 20 million barrels of crude and refined products—and roughly 20% of the world’s LNG—passed each day before the US-Israeli military operation against Iran on 28 February. Brent crude touched $83.50 a barrel on Friday 8 August, a 3% weekly gain, while West Texas Intermediate traded between $77.20 and $78.18. The physical disruption has translated directly into consumer pain: in the United States, gasoline jumped roughly 45% and diesel over 48% between late February and early May, according to Statista.

The impact is especially stark in Bosnia and Herzegovina, where diesel averaged about KM2.35 per litre in February. By mid-April it hit KM3.67, a decade high, before easing to KM3.26–3.45 on 10 August. That leaves motorists and businesses paying 45–50% more than before the conflict. Prices initially spiked after Iran sealed the strait, but have softened slightly since a memorandum of understanding was signed in Islamabad, fuelling hopes for a negotiated reopening.

At the same time, the world’s five largest listed oil companies—ExxonMobil, Chevron, BP, Shell and TotalEnergies—reported a combined $48 billion profit for the second quarter. Cash flow surged to near $90 billion, the highest in history, topping even the windfall that followed Russia’s invasion of Ukraine in 2022. Those numbers have ignited a political firestorm in Washington, with President Trump accusing Exxon and Chevron of “excessive profits” and renewing his demand for lower pump prices.

Why the Big Five Are Swimming in Cash

The Windfall for Big Oil

The record profit and cash generation are a direct consequence of the price spike caused by the Hormuz closure. Upstream margins widened dramatically as Brent surged, while refining and marketing divisions—which typically benefit from higher crude—also captured fatter spreads. The $48 billion figure is a stark reminder that the majors’ earnings are tightly coupled to geopolitical risk. Unlike the post-Ukraine price surge, which was driven mainly by sanctions and voluntary embargoes, this crisis stems from a physical blockade, making the supply disruption more acute and less elastic.

Mounting Pressure from Washington

Donald Trump’s public rebuke of Exxon and Chevron revives a long-standing tension between the White House and the oil industry. While the president has previously pushed for lower gasoline prices ahead of elections, his framing of the profits as “excessive” introduces a regulatory twist. It raises the probability of a windfall tax discussion, especially as consumer discontent grows. Any legislative move—likely targeting US-headquartered firms—could reshape the sector’s capital allocation, from buybacks to reinvestment.

The Paradox of the Negotiation Breakthrough

The Islamabad memorandum has already taken some heat out of the futures curve, but actual traffic through the strait remains limited. Traders are pricing in a gradual, partial reopening rather than a swift resolution. For the oil majors, the resulting “lower but still elevated” price environment is almost ideal: it sustains high margins while reducing the political heat that a Brent price above $90 would bring. However, the risk of a sudden de-escalation—which could collapse the risk premium built into crude—is now the single biggest variable for their third-quarter earnings.

What Households and Markets Should Watch Now

For households and businesses exposed to diesel: the KM1.00–1.15 per litre premium over pre-crisis levels is unlikely to disappear quickly. Even if the strait reopens, logistical normalisation will take weeks, and the domestic pricing cycle in Western Balkan markets tends to lag Brent moves by several days. Budgeting for diesel at or above KM3.25 through the autumn is prudent.

For investors in the integrated oil majors: the Q2 cash flow bonanza will fuel aggressive shareholder returns in the second half of 2026. However, Trump’s remarks signal a non-trivial political risk. Watch for any formal legislative proposal on a windfall tax and monitor quarterly earnings calls for changes to capital allocation—a shift away from buybacks toward renewables or debt reduction would be a clear sentiment signal. The next milestone is the scheduled OPEC+ meeting in September, which may calibrate supply policy to the Hormuz situation.