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Oil prices surge on US-Iran war fallout

US-Iran tensions push oil prices higher, delivering blockbuster profits for energy giants ExxonMobil and Chevron.

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Photo: GIN Media / AI-Generated

The Numbers

ExxonMobil and Chevron together reported roughly $26.5 billion in combined second-quarter 2026 profit as Middle East supply disruptions, constrained refining capacity, and elevated fuel prices reshaped global energy markets.

  • Chevron: Adjusted earnings of $12 billion, or $6.06 per share, beat analyst estimates by 50 cents — its highest quarterly profit in at least six years. Revenue reached $70 billion against analyst expectations of $62 billion.
  • ExxonMobil: Net income of $14.5 billion, roughly double year-ago earnings — its highest haul since 2022 during the onset of the Russia-Ukraine war, though adjusted per-share earnings narrowly missed Wall Street forecasts.
  • Shell also posted nearly $10 billion in profit, its second-highest quarterly result ever.

Why It’s Happening

The war between the US/Israel and Iran, which began in late February 2026, has repeatedly disrupted the Strait of Hormuz — a waterway that normally carries about a fifth of global crude supply. On one recent day, only five ships were confirmed to have transited the strait. Brent crude has traded as high as $112/barrel during the quarter, and Chevron CEO Mike Wirth noted the danger has spread beyond Hormuz as Iran-backed Houthi forces have pulled the Red Sea — a key route for Saudi crude — into the conflict.

Beyond crude prices themselves, shrinking global refining capacity has pushed margins sharply higher, meaning oil majors are profiting twice over — once on production, once on turning crude into gasoline and diesel.

The Consumer Side

Average US gas prices have climbed above $4 a gallon. That combination — soaring corporate profits alongside pain at the pump — has become politically explosive:

  • Trump said the Justice Department will investigate oil companies for potential price gouging, even as his administration’s own war is driving the price spike.
  • Democratic senators Sheldon Whitehouse and Elizabeth Warren have publicly pressed oil executives on war-linked profits.
  • Advocacy groups like the Sierra Club are calling for a windfall profits tax.
  • Some European lawmakers are also raising the windfall-tax question.

Market Reaction — Not a Simple Win

Despite record profits, energy stocks haven’t rallied much: Chevron shares are up 23% in 2026, but most of those gains came in the first six weeks of the year, and since the war began shares have only advanced about 3%. Investors appear to be treating the windfall as temporary rather than durable. Chevron used the extra cash to cut debt by a record $8.4 billion rather than aggressively expanding.

Broader Context

  • Historical patterns from past conflicts suggest conflict-driven oil premiums typically persist for 6 to 24 months before supply substitution, demand destruction, or diplomatic resolution compresses prices.
  • Higher energy costs are also feeding a broader inflation debate, since they ripple into transportation, manufacturing, and agriculture costs.
  • Reports on August 3 note Trump has again suggested a deal with Iran is close, though nothing formal has been finalized — so oil prices remain sensitive to any ceasefire headlines.

Business

India: RBI policy, rupee and IT earnings

India’s markets face a crucial week as the RBI policy decision and TCS earnings approach, while rupee weakness and global pressures weigh on the Nifty.

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Illustration generated for editorial use | Global Insight News

RBI Poised to Raise Rates for the First Time Since 2023 as Rupee Slides and IT Earnings Loom

India’s central bank is set to announce its policy decision on Wednesday, October 7 at 10 a.m., with economists leaning toward its first rate hike in more than three years. The Monetary Policy Committee began its three-day meeting on October 5. It has held the repo rate at 5.25% for four consecutive reviews after cutting by a cumulative 125 basis points in 2025.

Economists polled by Business Standard expect a 25-basis-point increase to 5.50%, which would be the first hike since February 2023. A PTI poll of 16 economists and bankers found most expecting a hike with a hawkish tone, though views are not unanimous, and at least one economist expects the RBI to hold. A hike would also mark a reversal of direction after the 2025 rate cuts, and the committee could shift its stance away from “neutral.”

Inflation and the currency are the pressure points. Retail inflation rose to 4.82% in August, above the RBI’s 4% target for the third consecutive month. The rupee is trading near 96 to the US dollar, with crude oil above $100 a barrel adding to the strain. India’s economy has stayed strong, with GDP growth of 7.8%, yet the Nifty fell in September, with much of the pressure coming from outside the country.

Attention then turns to corporate earnings. Tata Consultancy Services reports second-quarter results for fiscal 2027 on October 8. The IT sector has been under pressure, and TCS shares fell about 14.5% in September. Investors will watch its comments on order books and client budgets.

What to watch: The RBI’s rate decision and stance on Wednesday, any rupee-support measures, and TCS’s guidance on Thursday.

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Pressure on US automakers. Reuters reports that GM, Ford and Stellantis could see their combined US market share dip to 36% for the quarter

GM, Ford and Stellantis could see their combined U.S. market share fall to around 36%, highlighting growing pressure on Detroit’s biggest automakers.

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Detroit Three Slip to Record-Low US Market Share as Gas Prices Drive Buyers to Hybrids

GM, Ford and Stellantis are heading for their weakest US showing on record. Cox Automotive estimates their combined third-quarter market share at around 36%, an all-time low, while hybrid-heavy Asian brands including Toyota and Honda are expected to account for more than half of new vehicle sales.

The driver is fuel costs. The Iran war has pushed US gasoline to a national average of $4.43 a gallon in September, according to AAA, up from $3.20 a year earlier, and buyers are turning to hybrids and more efficient models.

Toyota is the clearest winner. Its electrified sales climbed 28.5% to 363,367 units, or 57.4% of its US sales, and its Corolla hybrid jumped nearly 36%. GM kept the top US sales spot, but its lead over Toyota shrank to 37,751 vehicles, and Cox has said Toyota could overtake GM in the coming years if the trend continues. GM’s quarterly sales fell 5.5% to 670,974 units. Honda posted a record hybrid quarter of more than 106,000 units, with sales up 9.3%. Stellantis sales were roughly flat at 324,277.

Ford is under particular pressure. Cox expects its sales to fall 8.8% through the first three quarters of the year, with its market share dropping nearly a full point to 12.5%. Cox also forecast that Hyundai Motor Group would outsell Ford for the first time, 511,421 vehicles to 504,172, though Ford argues that Hyundai and Kia are separate companies and that it outsold the two combined year to date.

Overall US sales for the quarter are estimated at about 4.1 million, down about 1% from a year earlier. The average new-vehicle transaction price rose 1.9% to $50,089 in August.

What to watch: Ford’s reported third-quarter sales, gasoline prices, and whether Detroit’s automakers shift more of their production toward hybrids.

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Chip-sector M&A. A chip supplier announced it is buying Synaptics for $5.7 billion in cash

Synaptics shares jumped 14% after a chip supplier announced a $5.7 billion all-cash deal to acquire the company.

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onsemi Switches to $5.7 Billion All-Cash Deal for Synaptics After Rival Bid Surfaces

Shares of Synaptics jumped about 14% after chipmaker onsemi (ON Semiconductor) agreed to buy it in an all-cash deal valued at about $5.7 billion. The revised agreement, announced late Thursday, October 1, pays $123 per share in cash and replaces the all-stock deal the companies signed on June 25, which was valued at about $7 billion.

The change followed competing interest. A filing shows Synaptics had received an unsolicited, non-binding proposal from another strategic party, which likely drove the renegotiation. Synaptics’ board unanimously concluded that the amended deal remains in shareholders’ interests.

Shares of Synaptics opened more than 14% higher on Friday, moving close to the cash offer. The stock had closed at $106.15 the previous day. onsemi shares rose about 6% in premarket trading from a prior close of $80.08, with investors welcoming that the cash structure avoids issuing new shares that would have diluted existing holders.

Under the original agreement, Synaptics holders were to receive 1.350 onsemi shares for each share they own. The new deal will be funded with cash on hand and about $2.45 billion in committed debt financing from Morgan Stanley. onsemi expects the acquisition to add to its non-GAAP earnings per share immediately, and has identified $200 million of annual run-rate synergies.

The deal still needs approval from Synaptics shareholders and regulators, with completion expected by mid-2027. It came amid a broader rally in semiconductor stocks.

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