The Iran War: Profit Windfall, Plus More?

Big changes are happening across the energy landscape due to the Iranian war. It is not just American fuel prices jumping at the pump. Gasoline and diesel prices obviously are up, with the average nationwide price for a gallon of gas recently standing at $4.09, according to the American Automobile Association, up 37 percent since Operation Epic Fury began on February 28. A barrel of West Texas Intermediate crude oil is up by the same percentage, climbing from $68 a barrel to more than $108 in intraday trading in April before retreating somewhat.

Fortunately, our country has nearly transformed into a net crude exporter for the first time since World War II. U.S. exports in the final week of April climbed to 5.2 million barrels per day, the highest level in seven months. While fuel imports were slightly above that level, that gap narrowed to just 66,000 barrels per day. Interestingly, the U.S. still imports a ton of crude because its refineries were set up decades ago to process imported, heavier, sour grades, rather than the domestic light sweet crude that has been gushing domestically since the fracking revolution in the 2000s.

Attacks on Middle East energy infrastructure and Iran’s attempts to close traffic through the Strait of Hormuz led to the loss of 10.1 million barrels per day of worldwide supply in March (according to the International Energy Agency, which called it the largest oil supply disruption in history). As a result, the U.S. crude benchmark WTI is now gaining prominence as a more secure alternative to Middle Eastern supplies, with traders avoiding conflict zones and refiners seeking alternative sources of crude oil.

Could this generate an ongoing profit windfall? Global oil companies are set to make billions of dollars from the current situation, including U.S. giants like ExxonMobil, Chevron, and ConocoPhillips. While they are making more money per barrel, it is still a “high price, high risk” environment, where supply chain breaks can diminish gains.

Concerns persist about disruptions that prevent the physical delivery of cargoes, as well as high operational or hedging costs. The monetary returns to shareholders might be a bigger focus than massive production spikes, so pay close attention when the energy majors report earnings.

Farther downstream, hard times appear to be coming for the aviation industry, and it’s not only because of the TSA shutdown. Airlines have hiked ticket fares and baggage fees in response to the Iran war and soaring prices for jet fuel, which make up around 30 percent of airlines’ overall expenses (according to the International Air Transport Association). Elsewhere, IEA Director Fatih Birol warned that Europe has “maybe six weeks” left of remaining jet fuel supplies, given the energy crisis stemming from the closure of the Strait of Hormuz.

This situation is already having profound side effects. Budget carrier Spirit Airlines, which was operating on the thinnest of margins, appears to be headed for liquidation following its second bankruptcy in two years and has ceased operations. Airline capacity is also being scaled back, with United Airlines, KLM, Qantas, and others reducing their flight schedules. Lufthansa’s CityLine is even closing shop, grounding all 27 of its aircraft.

With organic growth potentially stalling for the immediate future amid concerns over profitability, airline companies have been exploring mergers and/or acquisitions to ensure their ongoing competitiveness. Reports recently suggested that United may have discussed an American Airlines merger with senior government officials, which could combine two of the largest U.S. carriers. 

And Transportation Department Secretary Sean Duffy has also said he envisions “room” for more M&A activity in the airline industry, noting that President Trump “loves to see big deals happen.”

PUBLISHED MAY 2026