Bill Seeks to Tax Windfall Oil Profits in US amid Iran War

(Update) May 15, 2026, 4:10 PM GMT: Article updated with API comment.

A California congressman has proposed legislation to tax oil companies' windfall profits during the war with Iran.

Revenue collected under the Iran War Oil Crisis Windfall Profits Tax Act would be released back to households to offset increases in their energy and transport costs.

"For American families, rising oil prices mean higher costs and greater financial strain. My bill will ensure oil companies don’t profit from the hardship facing working families and will help offset the rising costs that Trump's war has imposed on the American people", Rep. Brad Sherman said in an online statement.

"The war with Iran has driven global oil prices sharply higher, with U.S. benchmark West Texas Intermediate crude recently trading in the mid-$90s per barrel and, at times, even exceeding $100".

The bill seeks a 100 percent tax on revenue derived from the sale of crude above $75 per barrel. "The $75 threshold reflects a reasonable baseline consistent with pre-crisis price expectations", Sherman said.

The windfall tax would cease if President Donald Trump "declares that all hostilities with Iran have ceased, (2) the Strait of Hormuz is fully re-opened, and (3) the price of oil per barrel drops below $75 per the West Texas Intermediate", Sherman said.

"To ensure that American families directly benefit from this policy, the legislation establishes a mechanism to return revenues generated by the windfall profits tax to American taxpayers. Funds collected will be rebated back to households to offset increased energy and transportation costs from Trump’s war", Sherman said.

An American Petroleum Institute (API) spokesperson said in reply to a comment request by Rigzone, "Windfall profits taxes don't lower prices for consumers. We've seen this policy before - it deterred investment and reduced production".

"This is a cyclical industry, and targeting earnings in stronger periods undermines the long-term investment needed to keep energy reliable and affordable over time", the spokesperson added.

The White House has not replied to Rigzone's comment request.

Last Thursday Sherman introduced a separate bill to pause the exportation of crude and refined oil products during the war in a bid to hold down pump prices.

"America produces more oil than we use and is a net exporter of both petroleum and refined products. If we prohibit exports, the supply will exceed the demand, and prices for American consumers will drop", Sherman's office said in a statement.

"Currently, American oil is going to Europe and Asia to replace Middle East oil, reducing the domestic supply and raising the prices Americans pay".

The Stop Oil Exports to Lower Gas Prices Act proposes that Trump ban exportation until he certifies that U.S. "military operations against Iran" have ceased and Hormuz is fully open to global trade.

"The bill would implement a targeted export ban designed to stabilize domestic energy markets, reduce inflationary pressure and prioritize U.S. supply during a period of international crisis", Sherman's office added.

"It also includes limited flexibility for cases where certain crude oil cannot be efficiently refined domestically, allowing narrowly tailored export licenses provided that refined products are returned to the United States".

The White House has not responded to Rigzone's comment request on the export moratorium proposal.

An API spokesperson directed Rigzone to a post on social media platform X by its president and chief executive, Mike Sommers, that said, "bad policy ideas others have raised, like export restrictions, would have serious unintended consequences". Sommers said the Strategic Petroleum Reserve "was designed for disruptions like this".

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