Record Oil Profits, Yemen's Fuel Crisis and the Case for a Windfall Tax

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The war that began in late February 2026 between the United States and Israel on one side and Iran on the other did more than redraw the security map of the Gulf. It rewrote the economics of energy across the Middle East, and the countries least able to absorb that shock have carried a disproportionate share of the cost. Yemen, which buys almost everything it burns, is among them. As oil companies booked some of the largest profits in their history, the case for taxing those windfalls and directing the proceeds towards relief moved to the centre of economic debate.

The mechanism was straightforward. Within days of the opening strikes, Iranian forces declared the Strait of Hormuz closed, and traffic through the waterway that normally carries roughly a fifth of the world’s seaborne oil largely halted. Brent crude jumped about 10 percent to around 80 dollars a barrel at the start of March 2026 and passed 100 dollars on 12 March, after Iran’s new supreme leader indicated the closure would continue. A two-week ceasefire agreed on 7 April 2026, which Washington tied explicitly to the reopening of the strait, steadied the market without restoring the pre-war status quo.

For producers, disruption of that kind is revenue. Oxfam calculated in late April 2026 that six of the world’s largest fossil fuel companies, Chevron, Shell, BP, ConocoPhillips, Exxon and TotalEnergies, were on course to earn close to 3,000 dollars a second in profit over the course of 2026, roughly 94 billion dollars in total and about 37 million dollars a day more than the same six firms made in 2025. None of that increase reflects new discoveries, better technology or greater efficiency. It reflects scarcity created by conflict, and it is the definition of a windfall: income a company did not earn through anything it chose to do.

Yemen sits on the receiving end of that arithmetic. The country imports close to 90 percent of what it consumes, including fuel, wheat and medicines, and every one of those imports is priced through a freight and insurance market that repriced sharply once the Gulf became a war zone. Fuel arrivals at Red Sea ports fell to about 196,000 metric tons in the first two months of 2026, a decline of roughly 64 percent from the 551,000 tons recorded over the same period a year earlier and the lowest level in four years. Fuel is not a discretionary import in Yemen. It runs the generators that keep hospitals lit, the pumps that move drinking water, and the trucks that carry food inland from the ports.

The revenue side offers no relief. The suspension of Yemen’s crude exports has deprived the internationally recognised government of what was once its largest source of hard currency, tightening an already severe foreign exchange shortage, weakening the rial and feeding inflation that erodes wages faster than they can be raised. A government that cannot buy dollars cannot subsidise fuel, and a population paying import-parity prices for diesel in a collapsed labour market has little margin left.

The humanitarian ledger records the result. The United Nations and its partners launched the 2026 Yemen Humanitarian Needs and Response Plan on 18 March, seeking 2.16 billion dollars, with food insecurity identified as the most immediate threat to life; an estimated 18.3 million people were assessed as acutely food insecure. Higher fuel costs raise the price of every litre of water trucked, every clinic generator run and every tonne of grain moved, which means the same appeal buys less than it did a year earlier, before considering the shortfall in what donors actually provide.

This is the gap a windfall tax is designed to close. The instrument is not novel. The European Union imposed a temporary solidarity contribution on surplus fossil fuel profits under an emergency regulation in October 2022, and the United Kingdom introduced an Energy Profits Levy in May 2022, raising it to 35 percent the following January. Both rested on the same logic: where a price shock hands producers income they did not generate, a share of it can reasonably be recovered and redirected to the households and public services absorbing the other side of the shock.

The objections deserve a hearing. Industry argues that retrospective levies deter the long-cycle investment that eventually eases supply, that defining a windfall is harder than it looks once ordinary price cycles are accounted for, and that taxes introduced as temporary rarely stay temporary.

Those criticisms shape the answer rather than settling it. A levy narrow enough to fall only on profit attributable to the disruption, time-limited to its duration and paid into an identifiable fund rather than general revenue, meets most of the practical case against. For Yemen, the realistic channel is not a domestic tax on international majors, which the state has neither the jurisdiction nor the capacity to levy, but a committed share of what wealthier states collect going to humanitarian appeals and to energy-resilience projects that reduce dependence on imported diesel.

The underlying point is one of accounting. The same closure of the same waterway appears on one balance sheet as record quarterly earnings and on another as a hospital rationing generator hours. Both entries describe a single event. Deciding whether the first should partly fund the second is a political choice, not an economic impossibility, and one governments made as recently as 2022.