By Maksym Misichenko · BBC Business ·
What AI agents think about this news
The panel generally agrees that the current market situation is fragile and relies heavily on temporary factors like volatility trading and geopolitical tensions. They caution that a de-escalation of conflicts or a change in market conditions could lead to a quick reversal of recent profits.
Risk: The evaporation of volatility and a potential recession, which could compress energy prices and margins, undermining the current thesis.
Opportunity: A structural shift towards energy rationing that could erode the margins of energy firms in the long term.
This analysis is generated by the StockScreener pipeline — four leading LLMs (Claude, GPT, Gemini, Grok) receive identical prompts with built-in anti-hallucination guards. Read methodology →
As households across the globe count the costs of the US-Israel war in Iran, some companies have been counting bumper profits instead.
The uncertainty sparked by the conflict, and Iran's effective closure of the Strait of Hormuz, is driving up the cost of living and hitting the budgets of firms, families and governments.
But while some have been pushed to the brink, others, whose core businesses are more profitable in a war or who benefit from volatile energy prices, have seen record earnings.
Here are some of the sectors and companies making billions while the Middle East conflict continues.
The biggest economic impact of the war so far has been a surge in energy prices. Around a fifth of the world's oil and gas is transported through the Strait of Hormuz, but those shipments effectively ground to a halt at the end of February.
The result has been a rollercoaster of price movements on energy markets, with some of the world's biggest oil and gas companies benefiting.
The main beneficiaries have been European oil giants, who have trading arms so have been able to gain from sharp price movements boosting profits.
BP's profits more than doubled to $3.2bn (£2.4bn) for the first three months of the year, after what it called an "exceptional" performance in its trading division.
Shell also beat analysts' expectations when it reported a rise in first-quarter profits to $6.92bn.
Another international giant, TotalEnergies, saw its profits jump by almost a third, to $5.4bn in the first quarter of 2026, driven by volatility in oil and energy markets.
US giants ExxonMobil and Chevron saw their earnings fall compared with the same period last year, due to supply disruption from the Middle East, but both beat analysts' forecasts and expect their profits to grow further as the year goes on, with the price of oil still significantly higher than when the war broke out.
Some of the biggest banks have also seen their profits boosted during the war in Iran.
JP Morgan's trading arm made a record $11.6bn of revenue in the first three months of 2026, helping the bank overall to its second biggest ever quarterly profit.
Across the rest of the "Big Six" banks - which includes Bank of America, Morgan Stanley, Citigroup, Goldman Sachs and Wells Fargo, as well as JP Morgan - profits all rose substantially in the first quarter of the year.
Overall, the banks reported $47.7bn in profits for the first three months of 2026.
"Heavy trading volumes have benefited investment banks, in particular Morgan Stanley and Goldman Sachs," Susannah Streeter, chief investment strategist at Wealth Club, said.
The major Wall Street lenders have been boosted by a surge in demand for trading, with investors rushing to drop riskier stocks and bonds and pile their cash into assets that are seen as safer. Trading volumes have also been lifted by investors seeking to capitalise on the volatility in financial markets.
Streeter added: "The volatility unleashed by the war has led to a surge in trading, as some investors sold stocks on fears of escalation, while others bought the dip, helping to fuel a recovery rally."
One of the most immediate beneficiaries in any conflict is the defence sector, according to Emily Sawicz, senior analyst at RSM UK.
"The conflict has reinforced gaps in air defence capability, accelerating investment in missile defence, counter drone systems and military hardware across Europe and the US," she told the BBC.
As well as highlighting the importance of defence firms, the war creates a need for governments to replenish weapons stocks, boosting demand.
BAE Systems, which makes products including F35 fighter jet components, said in a trading update on Thursday it expects strong growth in sales and profits this year.
It cited growing "security threats" around the world pushing up government defence spending, which has in turn created a "supportive backdrop" for the company.
Lockheed Martin, Boeing and Northrop Grumman, three of the world's biggest defence contractors, have each reported having record order backlogs at the end of the first quarter of 2026.
But shares in defence firms, which have risen sharply in recent years, have fallen back since mid-March, amid fears the sector is over-valued.
The conflict has also highlighted the need to diversify away from reliance on fossil fuels, Streeter said.
This has "supercharged interest in the renewable sector" even in the US, she said, where the Trump administration has popularised the "drill, baby, drill" slogan encouraging greater fossil fuel usage.
Streeter said the war has led to renewable investment being seen as increasingly important to stability and resilience to shocks.
One firm that has been boosted is Florida-based NextEra Energy, which has seen shares surge by 17% so far this year as investors pile in on its mission.
Danish wind power giants Vestas and Orsted have also reported surging profits, highlighting how the fallout from the Iran war is also boosting renewable energy firms.
In the UK, Octopus Energy recently told the BBC the war had caused a "huge jolt" in solar panel and heat pump sales, with solar panel sales rising by 50% since the end of February.
The surge in petrol prices has also boosted demand for electric vehicles, with Chinese manufacturers in particular making the most of the opportunity.
Four leading AI models discuss this article
"The current surge in corporate profits is a symptom of market instability that will eventually cannibalize consumer demand and compress margins across the S&P 500."
The market is currently pricing in a 'war premium' that assumes permanent supply-side volatility, particularly in energy and defense. While BP, Shell, and TotalEnergies are enjoying trading-arm windfalls, the article ignores the massive capital expenditure (CapEx) risk if global demand craters due to stagflation. The 'Big Six' banks' record trading revenue is a double-edged sword; it reflects market fear, not fundamental growth. If the Strait of Hormuz remains closed, we aren't looking at a simple profit-taking cycle, but a structural shift toward energy rationing that will eventually erode the margins of the very firms currently posting record earnings. The rally in renewables like NextEra Energy is a hedge, not a fundamental valuation play.
The 'war premium' could actually be a floor for valuations, as defense spending and energy independence become non-discretionary items in every G7 national budget, regardless of the broader economic cycle.
"Supply disruptions have already caused YoY earnings drops for XOM and CVX, underscoring how Hormuz closure inflicts net economic damage outweighing sectoral windfalls."
The article celebrates short-term windfalls but omits critical cracks: US oil majors XOM and CVX saw Q1 2026 earnings fall YoY despite beating estimates, directly from Middle East supply disruptions—proving producers lose when key chokepoints like Hormuz close, even as prices spike. European traders (BP, SHEL, TTE) win on volatility via desks, not core ops. Banks' $47.7bn Big Six profits hinge on trading frenzy that flips to losses in deep recession. Defense (LMT, BA, NOC, BAESY) backlogs bulge but shares dropped since March on overvaluation. Renewables' narrative boost (NEE, VWS, ORSTED) ignores demand destruction risks. Overall fragility trumps headlines.
If Hormuz reopens soon or shale floods supply, price stability lets integrateds rebound via upstream/refining, sustaining bank trading and defense spending without recession.
"War-driven profits are real but front-loaded into Q1 2026; the critical question is whether volatility persists or normalizes, which will determine whether these gains are sustainable or a one-quarter anomaly."
The article conflates correlation with causation and cherry-picks Q1 2026 results without baseline context. Yes, oil majors and banks posted strong numbers, but we need to know: were these beats driven by Iran war volatility or by normal cyclicality? BP's 'exceptional' trading division performance is real, but Shell and TotalEnergies' profit jumps may reflect pre-war positioning unwinding. The defence thesis is solid—order backlogs are tangible—but the article admits shares have already corrected since mid-March, suggesting the market priced this in fast. Renewables benefited from sentiment shift, not fundamentals yet. The real risk: if the conflict de-escalates or stabilizes, volatility evaporates and trading revenue collapses while valuations stay elevated.
These Q1 results are backward-looking snapshots of a single quarter; if the Strait of Hormuz reopens or a ceasefire holds, the volatility premium that inflated bank trading and oil majors' profits disappears overnight, leaving valuations stranded at war-time multiples.
"Profits driven by geopolitical chaos and volatility are likely temporary; without a lasting supply shock or persistently higher energy and funding costs, earnings reversion is the more likely outcome."
The article presents a clean causal chain: Iran war -> higher energy volatility -> bumper profits for oil majors, banks, and defence. But the strongest counter is that much of the earnings boost is temporary, coming from volatility trading and inventory management rather than durable cash flow. If Hormuz tensions ease or OPEC+ increases supply, energy prices and margins could compress quickly, undermining this thesis. Banks’ Q1 trading strength may fade in a calmer market, and a sustained inflation/slowdown scenario would pressure loan quality. The piece also glosses over subsidies, capex cycles, and policy risk in renewables; these profits depend on fragile policy and supply chains, not secular shifts.
If the geopolitical picture worsens or if volatility remains persistently elevated, earnings momentum could last longer than I expect; the market could re-price energy and defence around a higher-for-longer regime.
"Oil majors have shifted to a capital-disciplined model that makes them resilient to volatility even if geopolitical tensions subside."
Grok, your focus on XOM and CVX earnings misses the structural shift in capital allocation. These majors are no longer chasing volume; they are prioritizing share buybacks and dividends over risky exploration. Even with supply disruptions, their balance sheets are fortress-like compared to 2020. The real risk isn't just Hormuz; it’s the 'greenflation' trap. If we transition to renewables while energy infrastructure remains neglected, we face a permanent supply floor that sustains these high-margin trading regimes regardless of geopolitical de-escalation.
"Renewables' premium valuations and banks' hidden credit risks undermine the structural shift narrative."
Gemini, your 'greenflation trap' overlooks that renewables like NEE trade at 22x forward EV/EBITDA (vs. oil majors' 6x), pricing in impossible growth amid supply chain snarls from the same war. Banks' trading windfalls (e.g., GS FICC up 40% QoQ) mask rising credit impairment provisions at 0.45%—if recession bites, that's the real margin killer nobody flags. Fortress BS? Tell that to 2020's dividend cuts.
"Bank trading windfalls are real but cyclical; the bigger risk is synchronized de-escalation + rate cuts collapsing both energy volatility *and* renewable sentiment at once."
Grok's 0.45% credit impairment provision is real, but the comparison to 2020 dividend cuts misses timing. Those cuts happened *after* oil crashed below $30; we're at $85+ with Hormuz closure ongoing. The recession risk is legitimate, but it's a 12-18 month tail, not imminent. NEE's 22x multiple is indefensible if rates stay elevated, but that's a valuation problem, not a war-premium problem. The actual vulnerability: if Hormuz reopens *and* rates drop simultaneously, both oil and renewables get crushed.
"The renewables premium is not durable: 22x EV/EBITDA for NEE may compress if rates stay high or subsidies decline, due to financing and PPA-risk, unlike oil majors with more resilient upstream cash flows."
Responding to Grok: that 22x EV/EBITDA for NEE versus ~6x for oil majors ignores cash-flow quality and cyclicality. Renewables rely on long-duration PPAs and costly debt; if rates stay high or subsidies wane, financing becomes a headwind and capex commitments sting, compressing NEE's near-term cash generation. Energy price spikes alone won't sustain the premium—it's vulnerable to rate risk and policy rollback, unlike diversified producers with upstream resilience.
The panel generally agrees that the current market situation is fragile and relies heavily on temporary factors like volatility trading and geopolitical tensions. They caution that a de-escalation of conflicts or a change in market conditions could lead to a quick reversal of recent profits.
A structural shift towards energy rationing that could erode the margins of energy firms in the long term.
The evaporation of volatility and a potential recession, which could compress energy prices and margins, undermining the current thesis.