Governments Tax War-Driven Windfall Profits Amid Global Energy Crisis
As rising oil prices and supply disruptions in the Strait of Hormuz push energy companies' profits to record levels, governments are moving to tax these war-driven windfall gains.
While the increase in oil prices and supply disruptions in the Strait of Hormuz have pushed energy company profits to record levels, governments around new regulations to tax these war-driven windfall gains are being implemented globally.
Rising Oil Prices and Energy Profits
The surge in oil prices has boosted the balance sheets of energy companies. Supply disruptions in the Strait of Hormuz and production losses in the Middle East have created a squeeze in the global petroleum products market.
It is estimated that the top eight oil companies made about $93 billion in profit in the first quarter, after oil prices topped $100 following the war.
Profit Margin Surge in Refineries
The Iran war has also created a major profit opportunity for refineries. Disruptions and attacks in the Strait of Hormuz have tightened crude oil supplies, increasing the risk of shortages in gasoline, diesel, and jet fuel.
In the second quarter, approximately 6% of global refinery production was taken offline due to the war. The contraction in supply pushed refined product prices higher and expanded corporate profit margins.
UK's Pioneering Tax Model
The most prominent example of an windfall profits tax is seen in the UK. The Energy Profits Levy, introduced in 2022, was raised to 38% in November 2024.
With the current tax burden, the effective marginal rate on North Sea oil and gas activities rises to up to 78%, and the regulation is planned to remain in place until 2030.
Additional Regulations in Romania and Italy
Romania takes a public share from the energy chain's revenue by applying a 0.5% tax on net turnover. The regulation is projected to last until the end of 2026.
Italy, on the other hand, has introduced an additional 2-percentage-point load to the regional production tax IRAP for energy companies during the 2026 and 2027 tax periods.
New Tax Bills and Calls in Europe
Portugal has approved a regulation that will introduce a 33% solidarity contribution on the portion of 2026 profits that exceed the average by 20%.
Meanwhile, Poland has brought forward a proposal envisaging a 60% tax on a certain portion of sales revenues, while Germany, Austria, Spain, Italy, Portugal, and Poland are demanding EU-wide taxation.
Developments in the US and Turkey
In the US, a bill supported by Democratic senators targets windfall gains resulting from the difference between pre-war prices and current prices, though it appears politically difficult to pass.
Parallel to the global increases, energy companies in Turkey, such as Tüpraş and Petkim, reported record net profits and revenues in the first half of 2026.