Equinor Profits Nearly Double to $11.5bn as War With Iran Lifts Oil Prices

Profits at Norway's state oil company nearly doubled to $11.5bn (£8.6bn) in the three months to the end of June, as the surge in oil and gas prices caused by the war against Iran boosted earnings.

Equinor benefited from a decision to increase oil and gas production at the start of the conflict, filling a gap in the market after a near-halt to shipping through the Strait of Hormuz caused Gulf oil flows to slump. It then profited a second time from the price effect of the same disruption.

Fears over global supply left Brent crude swinging between $75 and more than $100 a barrel between April and June, against roughly $60 to $70 in the same period last year. Prices fell after the US and Iran signed a memorandum of understanding last month, but have climbed again with the resumption of hostilities, rising about 3.3% on Wednesday morning in London to roughly $94.30 a barrel.

The combination lifted adjusted profits well clear of the $6.5bn Equinor made in the same quarter last year, and past analysts' forecasts of $11.37bn.

"Strong production in the second quarter enabled us to capture value from higher prices, contributing to strong cashflow and financial results," said the company's president and chief executive, Anders Opedal. "Reliable energy is important in a volatile world marked by heightened geopolitical tension. Our role is to deliver energy safely and efficiently every day."

The results arrive as the conflict that produced them shows no sign of resolution. Oil prices rose again on Wednesday after the US military launched its 11th consecutive night of strikes on Iran, hitting aircraft hangars and drone storage sites among other targets. The attacks have undermined hopes that diplomacy can salvage the interim ceasefire.

The risk is also spreading beyond Hormuz. Yemen's Iran-aligned Houthis, who control the coast at the mouth of the Red Sea, have announced a naval blockade of Saudi Arabia — which has been relying on a pipeline to the Red Sea to move millions of barrels to market while the Hormuz route remains restricted.

"Brent crude has raced upwards again to trade around $93 a barrel, the highest level in six weeks," said Susannah Streeter, chief investment strategist at the investment platform Wealth Club. "Risks to supplies are mounting again, with the effective blockage of the strait of Hormuz remaining a chokehold as tankers are stranded in and around the waterway, while risks to other crude routes are also intensifying."

For producers outside the Gulf, that is the shape of the windfall: every additional barrel Equinor lifts is worth more precisely because someone else's cannot reach the market.

Reported from the Guardian.