The U.S. energy sector is anticipating substantial profits from the conflict in Iran, yet major oil companies are hesitant to ramp up drilling, even with the Trump administration urging them to help alleviate rising gasoline prices.
President Trump has frequently encouraged U.S. energy firms to “drill, baby drill!” He’s even hinted at possible investigations into the sector for alleged price gouging, especially as consumers feel the financial pinch. This is a significant issue for Republicans as midterm elections approach.
Despite this pressure, oil giants remain firm in their decision not to increase production, viewing the current profit surge as a temporary advantage.
Joe Adamski, managing director at ProcureAbility, expressed that while the industry is in a strong position globally, oil companies seem to regard the situation as more of a “radar false alarm.”
Exxon Mobil recently indicated that its profits could rise significantly, possibly by $5 billion, with adjusted earnings reaching $15.7 billion—three times greater than the previous quarter’s earnings.
Chevron and Shell are also projected to post strong results this month, exceeding earlier projections by 45% and 37% respectively, according to industry experts.
Jeff Krimmel from Krimmel Strategy Group mentioned that due to ongoing global disruptions, the industry could see multi-billion dollar gains, similar to what was seen with Exxon Mobil.
big price increase
Recent attacks and airstrikes in the Middle East have led to significant inventory losses for U.S. oil companies as the Strait of Hormuz—an essential route for 20% of the world’s oil—is mostly closed. This situation has resulted in increased demand for alternatives such as U.S. crude, which surpassed $110 per barrel in April.
Refiners across Asia and Europe are scrambling to replace the Middle Eastern oil blocked in the strait, incurring additional costs of $30 to $40 per barrel as they vie for scarce supplies.
As of the past Friday, U.S. crude oil futures were trading at $71.25 per barrel, while Brent crude reached $75.61. The upward trend followed President Trump’s declaration that the ceasefire with Iran was “over,” leading to renewed military strikes near the Persian Gulf.
Trump has sought to boost fossil fuel production, consistently urging companies to expand their drilling and declaring a national energy emergency on his second term’s first day in January 2025.
Last year, the Interior Department unveiled ambitious plans to broaden offshore drilling near Florida and along California’s coastline, facing strong opposition from local politicians concerned about potential spills.
In March, the administration exempted Gulf drilling from the Endangered Species Act, citing “national security” as the reason during the ongoing Iran conflict. This decision was criticized by conservationists who highlighted risks to endangered species.
Even with these policy shifts, oil companies are not inclined to use their profits for new projects, as they expect demand to stabilize once the war concludes, unless there are lasting impacts.
In a dire scenario for the industry, OPEC’s potential collapse could allow Saudi Arabia to boost production beyond competitors, leading to oil prices as low as $40 per barrel.
Efficiency, not new drilling
The reluctance of significant U.S. firms to drill more doesn’t equate to a downturn in production. The U.S. reached a record production level of 13.6 million barrels per day in 2025, in contrast to Europe, which produces around 4 million barrels daily—less than 4% of global output, according to the U.S. Energy Information Administration.
Krimmel mentioned that last year’s production rise wasn’t due to increased drilling, but rather improvements in efficiency involving technology and equipment.
In fact, data from the EIA shows a decline in the number of new drilling rigs and wells in the U.S.
Krimmel noted the absence of a rush to build more infrastructure even when oil prices exceeded $90 and, at times, $100, suggesting that a production surplus existed prior to the war. Many predict that this surplus could reappear as the situation normalizes.
Companies like Exxon Mobil and Chevron stated that they don’t plan to drill beyond their initial forecasts despite the ongoing conflict.
Adamski pointed out that political factors may also be influencing majors’ hesitance to take on new projects, given that constructing rigs requires significant investment and faces environmental opposition.
“They’re aware of the political ramifications; they’re under scrutiny, and Congress might revisit discussions on windfall taxes,” he remarked.
As a result, instead of expanding production, firms might focus on stock buybacks and reducing debt.
pump pain
The considerable profits of oil companies could face increased scrutiny, particularly as the Iran conflict adds financial strain on American households—an estimated cost of around $1,000 per household according to economist Mark Zandi, as fuel and food prices rise.
With the midterm elections approaching, Trump has demonstrated interest in lowering gas prices. He recently proclaimed via social media that a new gas station chain would be offering gasoline for $3.479 a gallon—significantly below market rates. However, the details about the station’s operation remain vague.
Last week, the Justice Department requested state attorneys general to investigate possible antitrust violations by major energy firms after accusations of price gouging surfaced.
“I’ve instructed the Department of Justice to begin an investigation without delay. Gas prices need to come down sooner rather than later!” Trump remarked in a June post on Truth Social.
As of late last week, gasoline prices fell at a slower pace than crude oil, settling at $3.88 a gallon after peaking at $4.56 earlier this spring, as noted by AAA. Experts explained this delay is a common occurrence, as gasoline and oil prices don’t always fluctuate in tandem.
Krimmel summed it up, stating: “This is really just politics. Gas prices increase, and people are understandably upset. Politicians must appear responsive to those sentiments.” He added that there’s little indication of anything unusual occurring within the market.
