Chevron posted its largest quarterly net profit on record—$12.1 billion—on Friday, as major oil companies continue to capitalize on worldwide oil and gas supply disruptions stemming from the Iran war.

ExxonMobil reported $14.5 billion in second-quarter income, while Shell earned $10.8 billion in net profits. Both figures represent the strongest quarters for the companies since 2022, when they last benefited from supply shocks tied to Russia's ongoing invasion of Ukraine—a period that similarly drew political scrutiny and prompted several European governments to impose windfall profit taxes on energy companies.

The windfalls extend beyond elevated crude prices. Oil and gas producers are also reaping gains from record refining margins and exceptional petrochemical profits in North America—all driven higher by the effective closure of the Strait of Hormuz, a chokepoint that normally carries roughly one-fifth of global daily oil consumption. The combined results delivered net profits reaching 11 figures.

Chevron CEO: Demand Destruction Not Evident

Chevron CEO Mike Wirth expressed measured confidence about demand outlook, telling analysts he does not expect the conflict to significantly reduce global fossil fuel demand beyond the short term.

"Demand destruction is not obvious to me at any significant scale," Wirth said on the earnings call. "I would say it's hard to find evidence of that at this point."

Wirth did acknowledge uncertainty around China, however, noting: "China is a black box. That's the big question is, 'What's really going on in China?'"

With the global oil benchmark hovering near $90 per barrel, China's sharp reduction in oil exports—by close to 4 million barrels daily—is the primary factor keeping prices from climbing even higher. Although China is accelerating its transition toward electric vehicles, it has also drawn heavily from its world-leading strategic reserves and curtailed fuel exports—moves that may not signal permanent shifts in the country's energy landscape.

Chevron Eyes Iraq Investment, Kirkuk Pipeline

Maintaining an optimistic stance on the Middle East, Chevron is planning further investment in Iraq. These plans include reopening and expanding the long-defunct Kirkuk-to-Baniyas pipeline to the Mediterranean, which would establish an alternative export route less dependent on the Strait of Hormuz.

Exxon Production Hit by Qatar Disruption

Exxon, which carries greater exposure to Middle Eastern disruptions than Chevron, saw its profits fall short of all-time highs largely due to the temporary loss of production in Qatar. Excluding the Middle East, Exxon reported its highest oil and gas production volumes in more than two decades—dating back to shortly after the Exxon and Mobil merger.

Exxon CEO Darren Woods said he is confident the Middle East energy sector will fully recover, including repairs to natural gas facilities in Qatar, though the timeline remains uncertain.

"Ultimately, the world has to resolve the conflict there and get to a stable situation where those critical resources in the region find a way to the market in a reliable way," Woods said. "I think there's a solution that the world will arrive at. I couldn't tell you when or exactly what it's going to look like. But those resources are just too critical to the overall economic health of the world for them to stay offline or for them to be unstable."

North American Advantage

Meanwhile, North America is benefiting from record-high oil production and expanding liquefied natural gas exports. U.S. refineries are operating at maximum capacity, capitalizing on substantial profit margins created by refinery outages worldwide—involuntary shutdowns across the Middle East and Russia (resulting from Ukrainian attacks), and voluntary reductions in China.

North American chemical plants are similarly advantaged by access to low-cost domestic feedstocks, primarily ethane derived from natural gas liquids. This stands in sharp contrast to the more expensive, oil-based naphtha feedstocks relied upon throughout Europe and Asia.

"They've been buoyant to say the least over the last few months," Wirth said of petrochemical profit margins.

Political Backlash Over War Profits

The record profits have drawn sharp criticism from those who argue that major oil companies are profiting from geopolitical conflict while consumers face higher costs at the pump and broader inflationary pressures.

In a statement issued by the left-leaning Clean Power group, former Democratic Washington Governor Jay Inslee said: "Oil and gas companies are pocketing billions from Trump's war while the consumers pay more at the pump and the grocery store." He added that "Trump is blocking cheaper, more secure clean energy so consumers have no choice but to pay his donors."

Market Reaction Mixed

Wall Street's response was measured despite the outsized earnings. Chevron's results exceeded expectations, pushing its stock up over 2% to a market capitalization above $390 billion. Exxon's figures were more closely aligned with analyst estimates, resulting in a 1.5% decline and a market cap just below $650 billion. Both stocks remain near all-time highs after setting records in late March.

Permian Basin Dominance

Exxon and Chevron continue to produce record volumes from the Permian Basin, spanning West Texas and southeastern New Mexico.

Approximately 40% of Exxon's global oil and gas production originates from the Permian, totaling 1.8 million barrels of oil equivalent per day. Chevron ranks a distant second with more than 1 million barrels daily from the Permian, accounting for over a quarter of its total output.

The two competitors also serve as partners in certain regions—reluctant "frenemies" on the global stage. Outside the United States, Chevron's largest production base is in Kazakhstan, where Exxon holds a minority stake. Conversely, Exxon's largest non-U.S. production comes from Guyana, where Chevron became a minority owner following its $53 billion Hess acquisition last year. Both Guyana and Kazakhstan are projected to deliver substantial oil and gas growth in the coming years.

Exploration Push

Once the Iran war concludes and Middle Eastern nations restore higher production levels, global markets could face a temporary oversupply. Nevertheless, both Exxon and Chevron argue that new oil sources will be needed over the longer term as existing fields deplete, necessitating a fresh wave of investment in frontier exploration.

Accordingly, both companies are channeling more capital into developing new prospects across South America—including Venezuela's reemergence—as well as West Africa, the Eastern Mediterranean, and other regions.

"This is the largest and highest-quality opportunity set that we've had in years," Wirth said. "Probably in my time in this role, we haven't had this deep an inventory of opportunity."