Hormuz crisis boosts oil industry profits as Brent rises

For companies such as Hapag-Lloyd, conditions are favourable. On Monday, the German shipping giant raised its earnings guidance for this year, now forecasting operating profit of up to €1000 million in 2026, well above its previous estimate of €400 million. The bringing-forward of orders around the world to avoid a possible further round of tariff increases by Donald Trump, together with higher freight rates linked to the Hormuz crisis, has improved Hapag-Lloyd’s outlook. But the effects may extend further.

Indeed, the German group is only one of several economic players set to benefit from the turmoil in the Middle East, where the Strait of Hormuz has become a naval battleground. It is a threat to the global economy, yet one that brings substantial gains for the oil industry.

When Trump announced that he wanted to be the “guardian of Hormuz”, imposing a “toll” of 20% on the value of goods passing through it, a fresh period of uncertainty opened up for global maritime trade and the cost of oil products. It did not last long, however: in less than 24 hours, the US President reversed his planned toll.

Brent rose above $87 a barrel this week after Trump threatened to impose a “toll”

Hormuz crisis lifts Brent and refining margins

What is certain is that Brent surged as the war in the Middle East intensified. Europe’s benchmark crude had ended last week at $76 a barrel - only days after falling to prices seen before the conflict - but accelerated this week and was traded at more than $87. In June, the global oil market had been on a path towards gradual recovery, with specialist consultancy Kpler estimating that Middle East exports would take three to four months to return to their average level of recent years. New attacks in Hormuz, however, halted that normalisation and compounded an already difficult situation. Russia’s refining capacity, in a country that is one of the world’s largest diesel suppliers, has fallen to its lowest level in 21 years following attacks carried out by Ukraine.

The current situation has produced a sharp increase in refining margins across the oil industry. Galp’s margins have risen successively, from $4.7 a barrel in the third quarter of 2024 to $16.8 in the second quarter of this year. That figure has only been surpassed by the $24 margin Galp achieved in the third quarter of 2022, at the height of the energy crisis caused by Russia’s invasion of Ukraine. At Sines, Galp processed 22.6 million barrels of crude oil in the second quarter, 7% more than in the same period a year earlier.

The Portuguese oil company is far from alone. In the second quarter of 2026, several businesses in the sector saw refining margins climb on the back of attacks between the United States and Iran. They include BP, which posted margins of almost $30 a barrel between April and June, up 149% year on year, and Shell, where the refining margin jumped 125% to $20 a barrel. In neighbouring Spain, Repsol and Moeve (formerly Cepsa) also rode the “wave”, recording gains of 28% (to $14 a barrel) and 94% ($11.3), respectively.

With another earnings-reporting season approaching, most oil companies are expected to report higher profits, on an even larger scale than in the first three months of the year. From January to March, Galp reported net income of €272 million, up 41% on the same period a year earlier. Spain’s Repsol and Moeve made profits of €873 million, up 56.7%, and €147 million, up 7%, respectively. BP, meanwhile, increased its earnings by 129% to $3.2 billion, while Shell reached $5.7 billion, up 18.8%.

Limited refining capacity in Europe and Russia is putting pressure on fuel prices

For now, fuel logistics are adapting. “High prices are already steering replacement supply towards Europe. Saudi, Indian and US diesel cargoes earn more when delivered to Rotterdam, but they take weeks to arrive,” James Noel-Beswick, commodities director at consultancy Sparta, tells Expresso.

Yet, with crude and refined-product prices rising and the diesel market particularly tight, is there any prospect of oil-product prices falling back? “A lasting easing of tensions in Hormuz, a recovery in Russian refining or a sustained release of Chinese products could significantly lower prices,” says James Noel-Beswick. “But until one of these occurs, the diesel market will remain tight. Inventories were already fragile before this escalation, and the latest events have emerged in an already difficult situation,” adds the Sparta specialist.

Uncertainty for the economy

For the time being, the economic impact remains uncertain. “Despite the sharp increase in oil prices seen during the second quarter, the Portuguese economy does not appear to have incurred a material cost in terms of economic activity growth. Naturally, a prolonged period of tensions in the Middle East represents a downside risk, but the effects seen so far appear relatively contained. And, somewhat surprisingly, smaller than we expected,” says João Borges de Assunção, a professor at Católica Lisbon.

Borges de Assunção considers it “premature” to revise the forecast for Portugal’s economic growth of 1.8% this year. Paula Carvalho, BPI’s chief economist, takes the same view. “The 1.8% forecast for GDP growth in 2026 remains unchanged, as this scenario was drawn up using average commodity prices similar to current levels. However, the scope for positive surprises that existed in a context of lower tensions, compliance with the memorandum and the opening of the Strait of Hormuz is now much smaller,” says Paula Carvalho.

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BPI had already set out its forecast for the Portuguese economy based on an average price of $90 a barrel, meaning that the current level of crude still represents a “comfortable” situation in relation to the bank’s latest estimate.

Paula Carvalho acknowledges, however, that “the recent worsening of tensions in the Middle East once again intensifies downside risks for the economy and upside risks for prices and interest rates”. BPI’s chief economist notes that “the main transmission channel in Portugal is fuel prices” and that “activity may also be adversely affected through households’ lower purchasing power, weaker business confidence, and greater uncertainty, with a potentially unfavourable impact on consumption and investment”.

Where the oil price will head in the coming weeks remains, as it has always been, unknown.

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Q&A

Why did oil fall back to pre-conflict levels while petrol and diesel did not?

Before the US attack on Iran at the end of February, Brent was trading at $70 a barrel, before exceeding $120 in April. Following the peace agreement between the two sides in mid-June, the price returned to pre-war levels for the first time in four months, as a new “wave of oil” flooded markets. Prices for refined products - petrol and diesel - did not follow the same path, which is why prices at the pumps did not fall further. Since the April peak, Brent has dropped by around 50%, while diesel has recovered by only 41%.

What factors are putting pressure on refined-product prices?

They are traded at a spread to crude, which determines refinery profits and reached four-year record highs at the beginning of July. Even so, the two markets normally move “hand in hand”. The present “disconnect” stems from supply constraints: refineries are shut down in the Middle East and under attack in Russia, restricting exports. The result is that inventories stand below the historical average of the past five years. With ships held up in the Persian Gulf, the cost of sea transport - freight - is also significantly increasing the price of refined products.

What is the rockets and feathers phenomenon?

In 1990, economist Robert Bacon published a study entitled “Rockets and Feathers”, examining how final petrol prices in the United Kingdom responded to changes in costs. Based on data from 1982 to 1989, he concluded that “the upward adjustment process [in retail prices] is slightly faster and the adjustment period is more concentrated than when costs fall”. Portugal’s Competition Authority has also examined the matter, noting that the intensity of the phenomenon varies from country to country. This month, ERSE, the energy regulator, dismissed the idea of irregularities in the fuel market after the minister requested further analysis of price behaviour.

Are Portugal’s prices above the European average?

European Commission data for early July show that Portugal’s retail diesel price was 0.25% below the eurozone average, while the price of petrol was 1.83% higher. Before tax, during the first week of July, petrol in Portugal was 1.28% cheaper and diesel was 4.13% below the eurozone average; since the start of the Hormuz conflict, the Portuguese price has always remained below the average.

How are prices expected to develop?

Brent has risen sharply again, and significant new increases in refined-product prices were expected this week. This is not good news for pump prices, with further fuel rises already expected next week. Last Monday, diesel rose by 6 cents per litre and petrol by 2 cents, already including the Government’s discount on ISP fuel duty.

How sensitive is the economy to oil-price movements?

A steep increase in the oil price and in the cost of sea transport has implications for the global economy, adding to inflation. In the 2026 State Budget, the Government used an average Brent price of $65.4 a barrel for this year. The Budget’s sensitivity analysis estimates that a 20% increase in the price “would result in a reduction of 0.1 percentage points in GDP growth in 2026”. Bárbara Silva and Miguel Prado