Trump’s War on Iran: As People Are Killed, Big Oil’s Windfall Will Deepen Our Energy Affordability Crisis

Trump and Netanyahu bombed Iran on Saturday in the midst of ongoing negotiations that Oman’s Foreign Minister said were nearing a conclusion. Nearly 800 Iranians are reported dead at the time of writing, including over 150 school children killed in just one strike of this reckless, risky, and illegal attack. The Persian Gulf region is now in chaos. 

The Iranian people have suffered for decades under a regime that deserves no sympathy. A regime that ultimately came to power in the wake of U.S. imperialist interventions in the 1950s. What we’re seeing today is just the latest escalation of decades of violent intervention by the U.S., Israel and other imperialist powers in pursuit of oil and their own narrow objectives. Now, the U.S. and Israeli action has killed more innocent people with no clear strategy for where it may lead. 

The Persian Gulf has some of the world’s largest oil and gas producers, and a large proportion of that production, around 20% of global petroleum, must pass through a relatively narrow corridor controlled by Iran to reach global markets: the Strait of Hormuz. Crude oil, refined petroleum products, and Liquefied Natural Gas (LNG) traverse the strait in vast quantities every day. But not since Saturday. With missiles, fighter jets, and drones circling, shipping has ground to a halt, and Iran reportedly threatened to close the strait by force on Monday. Depending on how long the violence and its atrocious human toll continues – Trump said it may take weeks until his undefined objectives are achieved – this will have huge implications for energy markets. Oil and gas companies may achieve huge windfall profits in a year that previously looked far less lucrative for them, and billions of people could see their energy bills soar. 

Oil Prices Were already Factoring in Potential Conflict
Heading into 2026, the outlook for oil prices, and consequently, oil industry profits, was gloomy. Global oil demand growth is slowing due to surging electric vehicle adoption and slowing economic growth. The amount of supply entering the market was considered more than adequate to meet demand, and consequently, oil prices fell. At the beginning of January, oil was at around $58 per barrel, down from the $70s a year earlier. Most market analysts expected prices to stay around $60 for 2026 and into at least the first half of 2027. As oil companies reported their 2025 earnings in late January and early February, many announced cuts to their dividends and share buyback schemes as they prepared for a year in which profits would be squeezed by low prices and tepid demand growth. 

Oil prices started rising in mid-January as protests in Iran made oil traders nervous. The protests were brutally suppressed, but as Trump signalled he was sending U.S. naval vessels into the Gulf to threaten Iran, oil markets priced the risk of conflict into an otherwise oversupplied market. As a result, prices have been in the mid- to upper-$60s for much of February. 

Now, with a war raging in the Persian Gulf, oil prices have risen to the highest level in over a year, albeit still below the levels seen in 2022 after Russia’s invasion of Ukraine. This relatively tepid response to what many analysts see as a doomsday scenario for oil markets is partly due to high strategic reserve levels in China, spare supply capacity worldwide, and Saudi Arabia’s capacity to divert some of its crude oil around the Strait of Hormuz by pipeline. 

If shipping were to resume within, say, a week, a full-scale oil crisis could be averted. But the longer shipping through the Strait of Hormuz is disrupted, the greater the pressure on global supplies. With about 15-20% of global petroleum flows constrained, a prolonged disruption could send oil prices through the roof. It is only the beginning of what could be one of the most consequential military operations for global energy markets since the U.S invasion of Iraq, and there is no clear sign of an exit strategy. 

Fossil Gas and Electricity Prices May Bear the Brunt

While oil is relatively well supplied for the moment, the situation for fossil gas is far less stable and possibly more consequential. The United States, China, and other major economies do not hold strategic gas reserves the way they do for oil. Gas is held in storage to balance supplies throughout the year, with storage generally filling in the northern hemisphere spring after being drained over winter. Some drainage occurs in the summer for gas-fired power generation as hot summers increase electricity demand for air conditioning. Storage is then replenished in the northern autumn, ahead of winter heating demand. It’s now March, and storage has been draining all winter. As winter temperatures ease, the market would normally be heading into the “injection season,” in which spare supply is injected into storage sites in preparation for rising demand later in the year. 

While there is some regional trade in gas through pipelines, for example, between Canada, the United States, and Mexico; Azerbaijan and Iran with Turkey; Algeria and Spain; and Russia and China, the global trade in fossil gas is dominated by the shipping of LNG. Since 2016, when the United States first started exporting LNG, global LNG supply has grown by 90%, according to Bloomberg data. With the full-scale invasion of Ukraine in 2022, Europe has become increasingly dependent on LNG imports as it rejects Russian pipeline imports. 

Qatar is the second-largest LNG supplier behind the United States, supplying 19% of global supply in 2025. The United Arab Emirates supplied another 1%, so 20% of the world’s supply is now stranded behind the Strait of Hormuz. Qatar’s LNG operation, the world’s largest single LNG production complex, was reportedly hit by a drone strike and, at the time of writing, was shut down. While it remains to be seen how badly it has been damaged and for how long production will be shut down, it is clear that these are seismic events with widespread implications. 

While there are clearly differences between today’s events and what happened in 2022 with the invasion of Ukraine, there are likely to be two striking similarities. Energy bills are going to rise, and oil and gas companies will see windfall profits. Let’s start with the former. 

Europe’s main gas price benchmark, the TTF, and Asia’s main benchmark, the JKM, both rose by around 40% by close on Monday. The growing dependence on LNG imports affects not only the price people pay for gas to heat or cook in their homes, but also the price of electricity. Electricity prices in these markets, as well as in the U.S., have become very closely tied to the price of gas. Gas is the leading source of electricity generation in the United States, supplying 43% in 2024. 

In the European Union, the figure is around 17%. LNG imports supply over 30% of EU gas. But it is the role of gas-fired generation as the marginal supplier that positions it as the price setter. While renewable energy sources provide cheaper electrons, when demand is high, more expensive gas is called upon and thereby plays the dominant role in setting the electricity price. 

Despite being the world’s largest gas producer, with some of the lowest wholesale gas prices, rising reliance on gas for power generation and surging LNG exports have linked U.S. electricity prices to the global LNG market. In 2022, following the full-scale invasion of Ukraine, U.S. wholesale prices jumped by two-thirds. This led to an 11% increase in electricity prices and a 21% increase in the residential price paid for gas for heating homes from 2021 to 2022. And despite some easing of prices in 2024, 2025 has seen energy price inflation become a central theme in U.S. politics. The United States gas benchmark jumped more modestly than the others on Monday, by around 3.5%, but was rising further at the time of writing on Tuesday, marking a 10% increase since markets closed on Friday, before the bombing started. The prospect of prolonged disruptions to Qatari LNG and, consequently, higher profits for major U.S. LNG exporters and traders is also reflected in spikes in stock prices. 

There are two U.S. LNG export companies whose sole business is producing and exporting LNG. Cheniere’s stock was up 8% since Friday, while Venture Global’s has soared 17%. 

Windfall Profits for the Oil and Gas Industry Bring Misery to Everyday People

In 2022, as fossil fuel price spikes fueled energy poverty, debt, and cost-of-living crises worldwide, the five largest oil majors together reaped nearly $200 billion in profits, setting new company records. This windfall represented a 125% increase over oil majors’ profits from the year before. 

Oil and gas companies and commodity traders fueled record profits by engaging in speculative trading practices in the wake of Russia’s invasion of Ukraine, cashing in on geopolitical uncertainty and importing countries’ vulnerability. Research has shown that fossil fuels were one of the biggest drivers of inflation in 2022, contributing around 20% to 40% to peak inflation in country-level studies. An analysis of the distribution of profits in 2022 among publicly listed oil and gas companies found that U.S.-based firms pocketed the largest share, and the richest Americans overwhelmingly benefitted from this windfall: 50% of U.S. firms’ profits went to the wealthiest 1% of individuals. 

This recent history is in grave danger of repeating. Possibly with more dire consequences. Russia was, and still is, a major global supplier of oil and gas. Sanctions have only redirected its supply and lowered the price it receives. A prolonged disruption of oil and gas flows through the Strait of Hormuz could have much wider implications. 

This is just one of many signals that the world’s continued dependence on globally traded oil and gas not only poses a grave threat to the climate but also to economic stability, and the prospects of peace and security for billions of people around the world. Whether as strategic targets of Iran’s retaliation or strategic objectives of Trump’s quest for global dominance, oil and gas assets are as much at the center of today’s geopolitical aggressions as they have ever been. And as investors maneuver to channel as much of the spoils of war from our bank accounts to theirs, while innocent lives are lost and destroyed, how will we respond this time?