ExxonMobil’s $14.5 billion second-quarter income and Shell’s $10.8 billion in net earnings represented their most profitable quarters since 2022, when they previously benefited from Russia’s still-ongoing invasion of Ukraine.

Not only are the oil and gas producers profiting from much higher crude oil prices, they’re also gaining from record oil-refining margins and sky-high petrochemical gains in North America—all of which are up because of the effective closure of the now-infamous Strait of Hormuz. The combined windfalls triggered rare net profits in the 11 figures.

Citing further bullishness, Chevron CEO Mike Wirth said he doesn’t expect the conflict to result in much reduction of global fossil fuel demand beyond the short term.

“Demand destruction is not obvious to me at any significant scale,” Wirth said in the earnings call. “I would say it’s hard to find evidence of that at this point.”

The caveat being that “China is a black box. That’s the big question is, ‘What’s really going on in China?’” Wirth said. With the global benchmark for oil currently hovering near $90 per barrel, China’s dramatic dip in oil exports—by close to 4 million barrels daily—is the biggest reason why prices aren’t much higher. Even though China is transitioning more quickly toward electric vehicles, China has drawn substantially from its world-leading strategic reserves and cut back on fuel exports. So those don’t necessarily portend long-term shifts.

In fact, maintaining optimism in the Middle East, Chevron is even planning to invest more in Iraq, including plans to reopen and expand the defunct Kirkuk-to-Baniyas pipeline to the Mediterranean, creating another channel that limits dependence on Hormuz.

For Exxon, which is more exposed to Middle Eastern disruptions than Chevron, the temporary loss of its production in Qatar is a key reason its profits fell shy of all-time highs. Excluding the Middle East, Exxon reported its highest oil and gas production volumes in over two decades—shortly after the initial combination of Exxon and Mobil.

But Exxon CEO Darren Woods said he’s confident the Middle East’s energy sector will fully rebound—the only question is when—including repairs to its natural gas facilities in Qatar.

“Ultimately, the world has to resolve the conflict there and get to a stable situation where those critical resources in the region find a way to the market in a reliable way,” Woods said. “I think there’s a solution that the world will arrive at. I couldn’t tell you when or exactly what it’s going to look like. But those resources are just too critical to the overall economic health of the world for them to stay offline or for them to be unstable.”

In the meantime, North America is advantaged with all-time high oil production and growing liquefied natural gas exports. U.S. oil refineries are maximizing their outputs because of huge profit margins from refinery outages around the world—involuntary outages in the Middle East and Russia (from Ukrainian attacks), and voluntary outages in China. Likewise, North American chemical plants are benefiting from their cheap domestic feedstocks—primarily ethane from natural gas liquids—versus the much more expensive, oil-based naphtha feedstocks used throughout Europe and Asia.

“They’ve been buoyant to say the least over the last few months,” Wirth said of petrochemical profit margins.

At the same time, many have expressed frustration over Big Oil profiting off the war while consumers pay much more to fill their gas tanks and cover the costs of inflation.

In a statement from the left-leaning Clean Power group, former Democratic Washington Gov. Jay Inslee said, “Oil and gas companies are pocketing billions from Trump’s war while the consumers pay more at the pump and the grocery store.” He added that “Trump is blocking cheaper, more secure clean energy so consumers have no choice but to pay his donors.”

Despite the massive profits, Wall Street wasn’t feeling overly generous on Friday. Chevron’s earnings exceeded expectations and its stock rose by over 2% to a market cap above $390 billion. However, Exxon’s results were more in-line with estimates, resulting in a 1.5% dip and a market cap just below $650 billion. Still-both are trading near all-time highs after hitting stock market records in late March.

Exploration rebound

For now, Exxon and Chevron will keep churning out record volumes of oil from the Permian Basin in West Texas and southeastern New Mexico.

About 40% of Exxon’s global oil and gas production is coming just from the Permian to the tune of 1.8 million barrels of oil equivalent daily. Chevron, which pumps out more than 1 million barrels daily in the Permian, is a distant second, representing more than a quarter of its total volumes.

The two rivals also are partners in parts of the world, making them forced “frenemies” worldwide. Outside of the U.S., Chevron’s largest production output is in Kazakhstan where Exxon is a minority owner. And Exxon’s largest non-U.S. output is Guyana where Chevron is a minority owner after its $53 billion Hess acquisition last year. Both Guyana and Kazakhstan are projecting notably more oil and gas growth in the years ahead.

After the Iran war is concluded and Middle Eastern countries begin pumping more oil again, the world could eventually face a temporary glut.

But Exxon and Chevron contend more oil sources are needed longer term as existing volumes are depleted, necessitating a new wave of investments in global, frontier oil and gas exploration.

That’s why they’re both putting more funding into developing new oil and gas prospects in South America—including the reemergence of Venezuela—as well as West Africa, the Eastern Mediterranean, and other regions.

“This is the largest and highest-quality opportunity set that we’ve had in years,” Chevron’s Wirth said. “Probably in my time in this role, we haven’t had this deep an inventory of opportunity.”