Will US Oil Companies Be Big Winners From the War With Iran?

(Patria) - Energy prices have risen dramatically since the United States and Israel launched an attack on Iran on Saturday, which will almost certainly result in higher profits, AFP reports.

However, the question remains whether a new war in the Middle East will lead to increased investment in oil fields.

Geopolitical crises increase the profits of the oil industry if supply disruptions cause a sharp rise in commodity prices. This happened after Russia attacked Ukraine.
In the third quarter of 2022, ExxonMobil and Chevron reported profits of over thirty billion dollars. The results were driven by a sharp increase in crude oil and natural gas prices.

Brent oil futures briefly rose above $85 a barrel on Tuesday, while natural gas prices in Europe reached their highest level since 2023.

The increases show the market's reaction to the effective closure of the Strait of Hormuz, a waterway that accounts for about twenty percent of global crude oil supplies. The jump in the natural gas market is a consequence of the suspension of liquefied natural gas (LNG) production by QatarEnergy.

"Certainly, producers benefit when prices rise like this," said John Kilduff of Again Capital. "This will definitely help their profits."

Will US companies invest in producing more oil and natural gas?

Energy industry analysts do not expect companies to drill more wells or increase capital budgets unless they conclude that the disruptions will be long-term. Investments in projects that do not start for months or years require confidence that prices will remain high.

"What US companies would need to see is a sustainably higher price," said Dan Pickering of Pickering Energy Partners in Houston, who believes oil prices could reach $100 a barrel if the Strait of Hormuz remains empty for a significant period. But such a long disruption is far from certain.

President Donald Trump, who is aware of the political implications of gasoline prices ahead of the midterm elections, stated yesterday that the US Navy would escort oil tankers through the Strait of Hormuz if necessary and ordered Washington to provide insurance for the ships.

The announcement caused a slight drop in oil prices, which ended below their session highs today.

Oil prices could fall further if the US, China, and other countries use their strategic reserves, said Ken Medlock, a fellow at the Baker Institute for Public Policy at Rice University in Houston.

Futures markets currently show a gradual decrease in oil prices in the second half of 2026, implying that "the market sees this as a short-term" disruption, Medlock said.

How much could US energy supply increase and where would investments go?

While the US energy industry is poised to profit from disruptions in oil and gas supply in the Middle East, the United States "cannot simply 'flip a switch' to replace large, sudden disruptions in the Middle East," said Brian Kessens, portfolio manager at Tortoise Capital.

Some elements of the oil industry have already profited from the turmoil. Kessens said that refined products, displaced due to disruptions in Hormuz, have increased the profit margins of refineries on the Gulf Coast.

Other short-term beneficiaries include LNG exporters who do not have contracted capacity.

Despite this, "significant additional supply usually takes months to a year," Kessens said.

Among potential candidates for upstream oil and gas exploration, analysts said the most likely choice for additional investment would be shale deposits like the Permian Basin in the US, where oil companies are already active and which have a shorter payback period compared to other potentials.

"The focus would be on short-cycle, quick-return activities. US shale, perhaps a bit of Venezuela," Pickering said. "Then it would move to longer-term projects like exploration and offshore projects."