These profits are largely a product of supply constraints brought on by the war in the Middle East. With the Strait of Hormuz effectively blockaded, oil suppliers have rerouted shipments over land and through pipelines. The resulting supply shortages, constrained refining capacity, and higher transportation costs have driven up oil and gasoline prices, delivering windfall profits for producers.

But companies aren’t using those profits to drill lots of new wells or explore untapped oil fields. Instead, they’re pocketing the cash and paying their shareholders, experts say. What was once an industry defined by the “drill, baby, drill” ethos is now defined by another term: “capital discipline.” It’s a phenomenon in which rampant drilling and production growth has given way to tightened belts and bigger payouts to investors.

Oil executives expected a weak financial year in 2026 due to a supply glut, but the closure of the Strait of Hormuz constrained oil production and allowed companies to charge top dollar for use of their refineries outside the Middle East.

“While we didn’t anticipate the current situation, we were prepared for it,” Exxon CEO Darren Woods said in a July call with analysts, according to the Wall Street Journal. “Despite the temporary loss of approximately 10 percent of our upstream production, we delivered exceptional financial results.”

Chevron executives offered a similar assessment. In July, Chief Financial Officer Eimear Bonner told Bloomberg that the company didn’t adjust their production as prices rose. “We did not change any of our plan,” she said.

Finances first, politics later

The Trump administration’s focus on “unleashing” U.S. energy is running headlong into oil companies’ growing commitment to financial discipline. For instance, the administration assured the public that oil majors would leap at oil fields in Venezuela after the country’s leader, Nicolas Maduro, was detained in January. But drilling stayed low throughout the administration’s efforts to pry open public lands for oil development, and corporations have been wary and selective about new opportunities in Venezuela. Similarly, even as the administration has opened up U.S. federal lands for drilling, companies have shown only a lukewarm response. As Americans bleed cash at the gas pump, President Donald Trump has even accused oil companies of “making too much money” from the war, unable to otherwise influence them to significantly ramp up their production.

“Oil and gas companies respond more to financial incentives than they do to political signaling,” said Clark Williams-Derry, an energy finance analyst at the Institute for Energy Economics and Financial Analysis. “They’re going to be looking at their finances first rather than politicians’ demands.”

Lessons on discipline

If the U.S.-Israel war with Iran had occurred in 2012, oil companies might have seen the price spike as a chance to drill more wells. As fracking took off and prices rose during the 2000s, many companies tied their CEO compensation to production growth. Investors poured money into oil companies. But those days of aggressive production eventually ran into price crashes, especially after a Saudi-led coalition of oil-producing countries flooded the market with crude in 2014 and the COVID-19 pandemic sank prices again in 2020.

In the last five years, as investors soured on drill-happy oil companies, they embraced a new, more disciplined approach to capital expenditure. Investors wanted steadier returns. Rather than rewarding aggressive production growth, they pushed companies to focus on lower-cost drilling, restrain spending, and return more cash to shareholders.

“What is perhaps most telling about the corporate response to the turbulent forces impacting the oil and gas sector is just how little changed [in 2026],” Tom Ellacott, senior vice president of corporate research at Wood Mackenzie, said in a July press release. “Capital discipline has proved more durable than either the bears or bulls expected.”

Satisfied investors

Drilling in the U.S., as measured by the number of oil rigs, has ticked up during the summer, Williams-Derry noted, but only after the president launched a war in Iran that drove up oil prices. As of June, it had only recovered to the rate recorded at the same point last year, according to data from Baker Hughes, an energy technology company.

In this new mode, Williams-Derry said, international oil companies have used wars, notably the conflicts in Ukraine and Iran, to boost their revenues so they can maintain large payments to their Wall Street investors. In times without price spikes, oil majors collectively took out debt as they paid their investors, their revenues unable to support the payments on their own, according to Williams-Derry’s internal analysis of their cash flow statements. In an ironic twist, oil companies have benefited more from constraints on global oil production than from “unleashing” it.

The climate implications of this new ethos are complicated. Already, oil companies’ tight spending has drawn most of them away from renewable energy investments. France’s TotalEnergies is the one supermajor that has charged ahead with its renewables business, though the Trump administration agreed to pay the company more than $900 million to cancel two offshore wind projects off New York and North Carolina. More discipline may also push companies to capture and resell the leaking natural gas from oil fields because maximizing revenue from existing wells has become more attractive than drilling expensive new ones. And this new attitude could keep oil and gasoline prices higher for longer, maintaining the appeal of electric vehicles and renewable energy sources. (Chinese solar panel and EV exports to some countries have spiked during the war.)

A cash business

At least one analysis firm, Wood Mackenzie, believes disciplined oil companies could fall behind global demand, causing them to lose a share of the global oil market to nationally owned oil companies like Saudi Arabia’s, potentially changing the politics of energy security for Western countries.

Ultimately, however, this phase of “capital discipline” may only be temporary, Williams-Derry said. No oil company wants to be so disciplined that it begins to decline. Eventually, some growth will likely be necessary.

Still, those companies have proven as capable of benefiting from energy shocks to U.S. consumers as they are of relieving them, an important note for political actors hoping to rely on oil companies for energy security.

“At least for now, production of oil is no longer the way executives are getting paid,” Williams-Derry said. “What matters is their ability to generate cash.”

This article originally appeared in Grist. It has been edited to conform with Corporate Knights style. Grist is a non-profit, independent media organization dedicated to telling stories of climate solutions and a just future.

Austin Corona is an energy reporter at Grist.

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