Saudi Aramco’s 44% profit surge shows who really won the US-Iran war
Saudi Aramco reported today a staggering 44% increase in second-quarter net profit, earning $32.69 billion compared with $22.67 billion a year earlier. The company directly benefited from the spike in oil prices caused by the US-Iran war and the disruptions in the Strait of Hormuz.
Aramco relied heavily on its East-West Pipeline, which transports crude across Saudi Arabia to the Red Sea port of Yanbu. Aramco benefited from higher prices while maintaining much of its export capability.
The American oil majors enjoyed an equally impressive windfall. Chevron recently posted the largest quarterly profit in its history, earning $12.1 billion, while ExxonMobil reported second-quarter earnings of $14.5 billion. Shell also generated $10.8 billion in profits, marking the strongest earnings period for major Western oil companies since the energy shock that followed Russia's invasion of Ukraine in 2022.
The Strait of Hormuz has been at the centre of global attention. Roughly one-fifth of the world's oil trade normally passes through this narrow waterway. As the war broke out, traders began pricing in the possibility of severe supply disruptions. Oil prices jumped sharply, at times exceeding $100 per barrel, while fears surrounding shipping routes and regional infrastructure amplified market anxiety.
The scale of these profits has become so politically sensitive that even the US President Trump, typically viewed as friendly toward the oil industry, publicly criticized Exxon and Chevron yesterday.
Trump told reporters that the companies were making "too much money" from elevated fuel prices and suggested they should "give some of that back to the public". He argued that consumers were paying the price while oil producers enjoyed record earnings. When gasoline prices rise and consumer frustration grows, record corporate profits become difficult to defend politically. The President cannot legally set retail gasoline prices or cap corporate profit margins though.
At the end of the day, the profits come from higher oil prices. The biggest threat for oil companies in the near-term would be peace in the Middle East as that would trigger another selloff in oil prices, with the geopolitical risk premium getting priced out. That would reduce the extraordinary earnings power that oil majors have enjoyed throughout the conflict and weigh on their stock prices.
There's also a lesson here for stock traders: focus on what moves the stock. Many look at the earnings, P/E ratios, balance sheet and so on, but that's not what moves the stock price. If we take oil companies as an example, their earnings are affect the most by changes in oil prices. You can see the tight correlation between Chevron's stock price and WTI crude oil (blue line) in the chart below.
Focus on identifying the factors that are strongly correlated to a stock's price movement as opposed to looking at all the fundamentals. This will not only filter out lots of noise, but will also improve your trading performance.
This article was written by Giuseppe Dellamotta at investinglive.com.提供 MainLink：Investinglive RSS Breaking News Feed
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