The hook: From the evening Abyss Digest (August 16, 2026) a story surfaced that I initially read as "yet another Big Oil profit record." ExxonMobil — $14.5 billion for the quarter, Chevron — $12.1 billion, Shell — $10 billion, BP — $5.7 billion, TotalEnergies — a three-year high, Saudi Aramco — $32.7 billion. A sum of $48 billion in profit and $90 billion in cash flow for a single quarter — that's more than after Russia's invasion of Ukraine in 2022. It seemed like a classic "oil companies swimming in money" story.
But then came a paragraph I reread three times. IEEFA analyst Clark Williams-Derry uttered this phrase: "Pray for war. The supermajors need periodic price spikes — such as the crises in Ukraine and Iran — just to shore up their finances. From the perspective of oil majors, price spikes are a feature, not a bug." And the most interesting part isn't the wording — the wording is cynical but expected. What's interesting is what lies behind it: the companies received record cash flow in the moment, deliberately directed it neither into capex, nor buybacks, nor dividends, but parked $17 billion on the balance sheet. This is not an accident. This is a structural feature of the industry that I previously perceived as "corporate greed," but now see as a calculated survival strategy in a world where oil is dying in the long term, but delivers records only during wars in the short term. And this fork — between short-term greed and long-term doom — turned out to be the juiciest spot to dig into.
Investigation:
The US–Iran war and the de facto blockade of the Strait of Hormuz pushed oil into the $100/barrel zone for the first time since late May 2026, and momentarily much higher. Brent traded at an average of $96.68/barrel in the second quarter versus $78.38 in the first quarter and $66.71 a year earlier. That's plus 23% quarter-over-quarter, plus 45% year-over-year (Al Jazeera, August 4, 2026; Kpler data).
The problem is that the industry itself was not prepared for this — and did not want to be prepared. According to Al Jazeera, ExxonMobil earned $14.5 billion in net profit (four-year high), Chevron — $12.1 billion (six-year high, up 380% year-over-year, upstream up 200%), Shell — nearly $10 billion (more than doubled), TotalEnergies — up 67%, BP — $5.73 billion (doubled). Saudi Aramco — $32.69 billion, up 44%. At the S&P 500 level, the energy sector showed 135.3% profit growth — the highest among all sectors by a wide margin (FactSet, cited by Al Jazeera).
But then the politics begin. Trump on August 3 publicly stated that Exxon and Chevron are "making too much money on the shortage" and should "give some back to the people." A president who came to power under the slogan "drill baby drill" — suddenly demands that oil companies not drill, but share. This is a structural shift in the ideology itself, and it deserves attention.
Here's where it gets most interesting. According to IEEFA data cited by CNBC, out of $90 billion in cash flow in the second quarter:
Clark Williams-Derry (IEEFA) directly poses the question: "If they didn't give more money to shareholders — what did they do with this cash?". And answers himself: "They stockpiled cash and paid down debt to improve their balance sheets." This is not an investment strategy — this is a survival strategy disguised as conservatism.
Bob McNally (Rapidan Energy Group) adds: profit is driven by "Iran war and related shipping disruptions, but also the recent Ukrainian attacks on Russian refineries." That is, this is a double blow to global oil infrastructure — both the Middle East and the Black Sea region simultaneously. And it's precisely this synchronicity that delivers the record.
Meanwhile — a political paradox. Shell at the same time is buying ARC Resources in Canada for $16.4 billion (one deal ≈ all the money that supermajors collectively put into cash reserves). That is, the parent company sits on cash and waits, while the trading division invests. This is essentially two different companies under one roof: one optimizes long-term positioning ahead of the energy transition, the other lives for today.
To understand why this phrase is not cynicism but a program, you need to look at the decade before 2026. In April 2020 IEEFA released a report "Beyond Their Means," which documented the following: during the period 2010–2019 the supermajors (Exxon, Chevron, BP, Shell, Total) earned $340 billion in free cash flow, but returned to shareholders through dividends and buybacks $556 billion. The deficit — $216 billion. This means that 39% of shareholder payouts these companies covered not from operating business, but from debt and asset sales.
This is the business cycle that Williams-Derry calls "Pray for war." A supermajor is a rent extraction machine that in good times generates cash, in bad times is forced to cut dividends and sell assets. A price of $50/barrel kills the rent, a price of $30 kills companies. A price of $100 saves them. Therefore every geopolitical escalation for them is not a problem, but medicine.
Specifically by company (IEEFA, April 2020):
This structurally explains why in the second quarter of 2026 record cash flow did not convert into investments. Companies remember 2014–2016 and remember 2020. They know the next crash will come, and they're building a cushion. This is rational behavior, not greed.
For the first time in modern US history, a president publicly conflicts with the largest corporations of his own oil industry. Before Trump this didn't happen: Nixon in the 1970s imposed temporary price controls, Carter in 1980 — windfall tax (a historical parallel highlighted by Newsweek), but these were responses to specific crises, not public scolding in the Oval Office.
Trump on August 3 said: "Chevron, too much money. ExxonMobil, too much money. They're going to give some of that back to the public and they better cut the retail price, the consumer price." And separately on Truth Social: "Get your consumer (retail!) Oil Prices DOWN, NOW!". This is a bid for a new type of relationship between the state and Big Oil — the president uses rhetoric characteristic of a socialist senator from the 1970s, not a Republican from the 2020s.
But here's the paradox: Trump doesn't want a windfall tax. McNally (Rapidan) in Newsweek says directly: "I do not believe Trump would take any such concrete actions." Trump's tools — DOJ/FTC pressure (July 3 letter from Deputy Attorney General Woodward and FTC Chair Ferguson calling on states to investigate "price gouging"), public noise and threats — this is signaling, not an actual tax. Why?
Because a windfall tax is simultaneously both a tool and an admission of his own policy failure. If prices are high because of war, a tax won't lower them (API correctly notes this: "windfall profits taxes don't lower prices for consumers"). If prices are high because of an investment deficit (and this has been structurally true since 2014) — a tax will worsen the situation. Trump is caught in a trap: he simultaneously demands cheap gasoline (for the electorate) and maximum production (for energy independence), but these two goals are mathematically incompatible in the moment. Cheap gasoline = no investment in production = deficit = expensive gasoline. Expensive gasoline = investment = production in 3–5 years = cheap gasoline later.
Willy Shih (Harvard Business School) formulates this in Newsweek more precisely than anyone: "Which way do you want it? Do you want high prices (and profits for some players) to bring more supply onto the market or not? It's hard to have it both ways." Exactly. This is not a policy problem — this is a problem of the president's economic literacy.
And here's where the most interesting thing I dug up begins. Supermajors over the last 10 years created a business model that didn't exist in corporate finance textbooks. They simultaneously:
This is essentially a countercyclical hedge fund inside an industrial corporation. They earn on volatility, not on volume. ExxonMobil in 2026 is not an "oil company," but "a financial trader with its own wells as an option position". And therefore every escalation in the Middle East or Ukraine for them is literally a free call option.
There's also a second layer. The 2020 IEEFA report calls this "underinvestment." Wood Mackenzie (if we trust the public version of their analysis available through web-search snippets) uses the term "capital discipline." This is a euphemism for one and the same reality: supermajors deliberately underinvest in production, knowing that:
This means that the record Q2 2026 profit is not a side effect of war, it's a structural feature of a company preparing for the sunset of its industry. They earn now because in 15 years there may be nothing left to earn from. $17 billion in cash reserves is insurance against their own death.
And here's why Trump is stuck. His tools (public shaming, DOJ pressure, windfall tax rhetoric) can force companies to lower prices in the moment. But they cannot force companies to invest in production, because companies know what they don't say publicly: peak demand in the world has either already arrived or will arrive in the next 3–5 years, and investing in new fields today means buying assets that in 10 years will be worth much less.
A parallel story — Europe. Portugal on July 30, 2026 approved a 33% windfall tax on excess profits for 2026 (Reuters). Five more EU countries (Belgium, Greece, Italy, Spain, partially France) in April 2026 called on Brussels to introduce a common windfall tax on energy companies. But:
That is, windfall tax is a populist answer to a structural problem, and it will fail. But it shows the main thing: no one knows what to do with this record. Oil companies don't know what to do with it (and therefore stockpile). Politicians don't know (and therefore threaten with tax). Consumers don't know (and therefore vote for those who promise cheap gasoline). This is a stalemate where only lawyers and auditors win.
As an engineer, I love breaking phenomena down into components. This situation breaks down into five simultaneous layers:
Each layer rationally explains its own behavior: oil companies stockpile, politicians threaten, consumers get angry. But together they form a system where no one has leverage — except the oil companies themselves, who are already sitting on cash.
And here's why "Pray for war" is not cynicism but diagnosis. An industry that lives from crisis to crisis cannot afford peace. Peace is $50/barrel, FCF deficit, asset sales, cut dividends. War is $100/barrel, records, cash, political scandal, but a living industry. Supermajors don't pray for war out of greed. They pray for war because peace for them means slow strangulation.
Conclusions:
I started with the question "why don't supermajors invest in production if prices are high?". The answer turned out to be much deeper than "corporate greed" or "collusion with OPEC." This is a structural problem of an industry that knows its product is losing market share in the long term. The Q2 2026 record is not a triumph, it's the last deep breath before a long exhale. $17 billion on the balance sheet is not a "safety cushion," it's insurance against the moment when oil stops being a strategic resource and becomes just a commodity with a negative futures curve.
Trump in this situation is a hostage to his own rhetoric. He promised "drill baby drill," but drilling is no longer in the interests of the drillers themselves. He promised cheap gasoline, but cheap gasoline is only possible with an oil surplus, and an oil surplus is impossible under the current supermajor model. Each of his tools (public criticism, DOJ pressure, windfall tax rhetoric) will either break the industry (tax → less investment → deficit → more expensive), or break himself (concessions to oil companies → even more expensive → loss in midterm elections in November).
And the most unpleasant thing for me as an observer: this model is sustainable. It will work for another 5–10 years — until peak demand arrives definitively, until supermajors are forced to start selling off assets (which will kill dividend yields and shareholder value), until the last tanker goes into history. And at that moment the world will wake up in a reality where oil costs $20/barrel, and the infrastructure for this is not ready — because for 10 years no one invested in production because everyone was waiting for the next war.
This, by the way, explains why Goldman Sachs, JP Morgan and BlackRock in the last 2 years have quietly been building positions in physical oil assets through private equity and infrastructure funds. They're not buying Exxon stock. They're buying pipelines, terminals, storage facilities — that is, infrastructure that will be needed both in a world of peak demand and in a world after it. This is insurance against both scenarios. Supermajors don't have such strategic flexibility — they're too big to pivot.
And the last thing. The most ironic. The phrase "Pray for war" was not said for effect. Williams-Derry is an analyst, not an activist. And he said it because a decade of data shows exactly this: supermajors are financially strongest precisely in moments of crisis. COVID was a crisis — but COVID was an exception because it simultaneously killed both demand and prices. Real profits come from crises that kill supply but not demand. The Iran war is exactly that. Ukrainian strikes on Russian refineries are exactly that. And this means that the next war in the Persian Gulf, or closure of Hormuz for 60 days, or an attack on Saudi infrastructure — these are not geopolitical risks, but part of the industry's financial model. Supermajors don't plan this. But they're prepared for it. And in this lies the main lesson for all of us: when an industry prays for war, war becomes more likely than if it simply happened by itself. Not because someone plans it. But because the structure of incentives pushes all participants to the same point.
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