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Ukraine War Boosts Big Oil Profits, Highlights Energy Security

Back in 2022, the oil industry became the target of multiple attacks from high-ranking politicians because of the record profits Big Oil reported for that year.

It was the year of Russia's invasion of Ukraine, which had led to a surge in oil and gas prices-which in turn led to a rise in Big Oil profits as the developed world got a stark reminder that energy security is not a given. It also got a stark reminder that oil and gas are still the basis for the normal functioning of any economy.

President Biden accused the industry of "war profiteering" and threatened a windfall profit tax. The UK government and several European ones made good on their own windfall tax threats and implemented the new levy. Now, nonprofit Global Witness has tallied the profits once again, issuing a report that Big Oil made more than $250 billion since the war began.

When Big Tech made massive profits during the first year of the pandemic, Big Tech got a lot of happy shareholders and zero reactions from the political world. When Big Oil made massive profits because a substantial part of the world realized it couldn't take its oil and gas supply for granted, it suddenly became a target for accusations of war profiteering. Related: Russia Loses Appeal Against $50 Billion Payout to Ex-Yukos Shareholders

The five biggest oil companies in the world-BP, Shell, TotalEnergies, Exxon, and Chevron-distributed some $200 billion among its shareholders, Global Witness said in its report, finding it necessary for some reason to add in the same sentence that while they were doing this, more than 10,000 civilians died in the Ukraine war.

Trying to blame Big Oil for everything has become standard practice for many nonprofit organizations. Suggesting a potentially causal link between Big Oil's financial performance during the war-caused European energy crunch is taking things a bit too far. What the crunch actually brought to light was the fundamental importance of hydrocarbons for the energy security of Europe or, indeed, any other part of the world.

What the crunch made clear was that despite Europe's efforts in enforcing a transition from hydrocarbons to low-carbon electricity, oil and gas, even coal, were still indispensable for the continent's energy system. The price surge was proof enough that these commodities remained vital despite attempts by the political elites to get rid of them.

Two years later, the situation has changed-and it has changed as a result of that crunch that brought Big Oil's shareholders $20 billion in returns. The supply crunch and the resulting demand destruction did not go away in 2022.

The demand destruction continued even as both oil and gas prices subsided to much more palatable levels-because Europe had to switch from pipeline gas from Russia to LNG from the Middle East and the United States. And it was discovered that LNG is a bit more expensive than pipeline gas. It also discovered expensive energy does not make for strong economic growth.

Now, the biggest economy in the European Union is in a recession, and so is the UK, the world's sixth-largest economy. In both cases, the roots of the recession can be traced back to the energy crunch that actually began before the February 2022 entry of Russian troops into eastern Ukraine. It began in the autumn of 2021 when the first signs of a tight natural gas market emerged.

Big Oil made much lower profits in 2023 than it did in 2022. Nobody spoke a word about it-just like nobody said a word when the same Big Oil lost billions during the lockdown-driven oil demand slump in 2020. Apparently, Big Oil is only worth talking about when the supply and demand situation leads to stronger profits.

It's either accusations of profiteering or grim warnings about stranded assets when the world moves on from oil and gas to better energy sources. It must be frustrating to see this move not happening despite all the effort-and hundreds of billions of dollars-that are being put into it. 

By Irina Slav for

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Irina Slav

Irina is a writer for with over a decade of experience writing on the oil and gas industry. More