Shell, the last oil major to see profits rise due to the impact of the Iran war

Shell reported in its latest quarter a profit increase of close to 25% year-on-year, a result that analysts attribute directly to the volatility in oil prices generated by the Middle East conflict. Tensions around Iran, one of the relevant producers within and outside OPEC+, created uncertainty about global supply that translated into higher futures prices and better margins for integrated companies with trading operations like Shell.

The pattern is not exclusive to this company. BP, ExxonMobil, TotalEnergies and Chevron reported in the same period results that exceeded expectations, in all cases with upstream — exploration and production — margins as the main driver. The logic is direct: when the barrel price rises above the production cost of portfolio projects, each additional barrel produced generates more marginal profit. Companies that maintained active productive capacity while others divested benefit disproportionately from price spikes.

The geopolitical context creates an obvious tension for the oil industry. On one hand, high prices generate exceptional profits that companies use partly to buy back shares, pay dividends and accumulate cash. On the other, the political and regulatory pressure to accelerate the energy transition does not disappear, and fuel price spikes generate inflation that affects consumers and businesses. The question that investors and governments ask with increasing urgency is how long the oil business model has a growth horizon before the energy transition permanently changes the equation.