The military conflict between Iran and Israel that began on February 28, 2026, has caused a significant divergence in the earnings outlooks of global energy majors. While production in the Middle East has been severely restricted, record-high commodity prices are creating a multibillion-dollar windfall for companies with assets in other regions.
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The impact on corporate earnings is currently split between the “windfall” from higher prices and the “loss” from physical production shutdowns.
- TotalEnergies: The French major confirmed on March 12, 2026, that it expects to lose 15% of its global production (accounting for ~10% of its upstream cash flow) due to shutdowns in Qatar, Iraq, and offshore UAE. However, the company noted that an $8/bbl increase in Brent prices is sufficient to offset these losses.
- ExxonMobil and Chevron: US-based majors are seeing record valuations. Rystad Energy estimates a $63.4 billion boost in collective earnings for US oil companies due to the price spike. ExxonMobil’s market value reached $630 billion in mid-March, while Chevron rose to nearly $390 billion.
- Shell and BP: Goldman Sachs analysts predicted a combined £5 billion windfall for the two UK-based giants. Shell reached an all-time high valuation of £190 billion on March 13, despite declaring force majeure on some Qatari LNG deliveries.
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Energy has been the “singular sector” to maintain an upward trend as broader markets corrected. International markets (Europe and Asia) reacted more sharply than the US due to their higher reliance on energy imports.
Future earnings growth
While short-term profits are surging, analysts have identified three primary risks to future earnings guidance:
- Demand Destruction:
The Institute for Energy Economics and Financial Analysis (IEEFA) warns that sustained prices above $100/bbl may lead to “demand destruction,” where consumers reduce energy use, hurting long-term volumes. - Operational Stagnation:
Capital expenditure (capex) remains tight. Analysts from AJ Bell note that despite the price surge, neither BP nor Shell has significantly increased investment in new output, reflecting skepticism about long-term hydrocarbon demand. - Monetary Pressure:
Central banks (Fed, ECB, BoE) have signaled that energy-driven inflation may force them to hold or raise interest rates, which could eventually temper corporate earnings across all sectors by Q3 or Q4 2026.
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