French oil major TotalEnergies posted a 67% second-quarter earnings rise, its best quarter in nearly three years, as higher oil prices (due to the Iran war) and strong profit margins for refining fuels resulting from supply disruptions provided strong tailwainds for the business.
TotalEnergies also sees its production growing significantly in the third quarter, although exports will still be dependent on freedom of passage through the Strait of Hormuz.
“Hormuz is a battleground, and the risks of crossing are extremely high … We are beginning to consider this could become the new normal, with the strait opening on and off,” CEO Patrick Pouyanne told analysts on a results call.
TotalEnergies’ adjusted net income was USD 6 billion, in line with expectations, according to a consensus of analysts polled by LSEG.
However, weaker LNG earnings proved to be a big drag on the earnings. Still, the latest figures stood way above USD 3.6 billion, seen in the second quarter of 2025, and USD 5.4 billion, registered in the first quarter of 2026.
The company has also maintained its USD 1.5 billion share buyback scheme for the third quarter, with its stock rising 37% so far this year.
The Iran-Iraq war has disrupted traffic through the Strait of Hormuz, still cutting supplies, which is in turn causing massive price volatilities in the crude and gas segments. While the phenomenon has left a damaging imprint on the global economy, oil majors such as Norway’s Equinor have registered massive profit windfalls in this environment.
TotalEnergies’ exploration and production earnings reached USD 3.2 billion, a 64% rise from the same period a year ago and 25% higher than the first quarter of 2026, with Middle East operations slowly stabilising.
As per Pouyanne, both upstream and downstream segments benefitted from the war, which is unusual, as a higher upstream oil price means smaller margins on refining fuels. TotalEnergies’ refineries, mostly in Europe, have maximised diesel and jet fuel production, which are earning the best premiums given low inventories across the continent.
“Income from refining and chemicals, which includes TotalEnergies’ oil trading division, rose 362% to USD 1.8 billion, helped by stronger fuel margins and robust oil trading — eclipsing last quarter’s standout USD 1.5 billion contribution,” Pouyanne noted, while stating that the French energy giant’s SATORP refinery in Saudi Arabia should return to full capacity by the end of the Q3 2026 after sustaining damage from Iran war-related attacks.
Talking about the LNG division, it earned USD 807 million, a 22% drop, due to trading underperformance amid flat demand in Europe. The electricity division was down 7% at USD 533 million, but cash flow excluding working capital was up 28% due to TotalEnergies nearly doubling its portfolio of gas-fired power plants in the continent after closing a deal with EPH in April.
TotalEnergies will soon finalise its exit from its 10% stake in the sanctioned Arctic LNG 2 plant in Russia. The transfer of the venture’s 10% stake to Nordline, a subsidiary of the plant’s majority owner Novatek, has been approved by Russian authorities and will be completed in the short term.
Following Western sanctions on Russia in the wake of Moscow’s invasion of Ukraine, Total maintained ownership in key Russian plants exporting LNG but had been considering selling the stakes as the European Union (EU) kerbs are targeting companies from importing that gas or selling it in other jurisdictions.
“Soon after Arctic LNG 2 became subject to US sanctions in November 2023, Novatek approached us about a potential transfer,” Pouyanne said.
In 2022, the year which saw both the beginning of the Ukraine war and the West’s targeted economic response against Russia, Total took a USD 4.1 billion impairment on the project. In 2023, it declared force majeure. Total, however, is still earning about USD 400 million annually from selling cargoes from Russia’s Yamal LNG plant.
In Namibia, Total is expecting a final investment decision (FID) on the 150,000-barrels-per-day Venus development in the coming weeks. In Suriname, production on the Gran Morgu development will begin in 2028. In Cyprus, the Cronos gas field development will receive FID by the end of July 2026.