Middle East conflict disrupts energy markets, boosts profits for European oil giants

Europe’s leading oil and gas companies have reported substantial first-quarter profits as the ongoing conflict in the Middle East disrupted global oil supplies and drove prices sharply higher. The surge in earnings has renewed calls from London to Paris for increased taxation on what are being described as “extraordinary profits.”

Shell reported a net profit of approximately $5.7 billion (around €4.8 billion) in the first quarter, marking a 19 percent increase compared to the same period last year. The company attributed the rise to higher oil prices, improved refining margins, and increased trading activity.

Similarly, BP posted a significant rise in earnings, with net profit reaching $3.84 billion. TotalEnergies recorded an even stronger performance, reporting a 51 percent increase in profit to $5.8 billion.

In contrast, US-based energy companies ExxonMobil and Chevron experienced a decline in profits. Experts attribute this to the time lag effects in the derivatives market impacting US firms.

The conflict has also intensified pressure on global oil supply after Iran blocked the Strait of Hormuz, a key transit route. As a result, oil prices surged, with Brent crude averaging $100 per barrel in March and occasionally reaching as high as $120. Prior to the conflict, prices were around $70 per barrel.

Analysts note that European companies have particularly benefited due to their strong trading operations, allowing them to capitalize on market volatility. One analyst observed that these firms have operated more like “sophisticated traders in global energy markets than traditional oil companies” during this period.

The surge in profits has sparked renewed debate over taxation. In both the United Kingdom and France, there are growing calls to impose higher taxes on oil company earnings. Similar “windfall taxes” were introduced following the Ukraine war.

In the UK, oil companies currently pay a 38 percent surcharge on profits from North Sea operations, in addition to a standard 40 percent tax. However, this levy applies only to domestic production, and there is increasing pressure to expand its scope.

French President Emmanuel Macron has also emphasized the need for coordinated European action to address excessive profits and what he termed “speculative trading.”

Looking ahead, analysts expect company profits to remain strong in the second quarter, as market conditions are unlikely to stabilize in the near term. Over the longer term, companies may shift focus toward smaller, lower-cost, and faster-to-develop projects. Some firms have also indicated plans to continue oil and gas production while reassessing their climate targets.

At the same time, the importance of renewable energy in strengthening long-term energy security has regained attention.