It is probably hard for many investors to believe, but major oil companies no longer seem like the safe investments or big moneymakers they used to be. The oil glut and the collapse in petroleum prices is wreaking havoc on these firms’ revenues, and things could get much worse when Iranian oil returns to the world market.

The latest figures show that oil company revenues are now in freefall: Exxon Mobil’s (NYSE: XOM) revenue fell by $105.51 billion (€93.37 billion) between June 2014 and June 2015. Chevron (NYSE: CVX) lost $50.18 billion (€44.41 billion) in revenue in the same period, while BP’s revenue declined by $95.53 billion (€84.54 billion) in the same timeframe. Royal Dutch Shell (NYSE: RDS.A) lost even more revenue than Exxon, $110.30 billion (€97.61 billion), between June 2014 and June 2015.

How Iran Threatens Oil Company Profits

This carnage occurred at a period when Iranian oil was not on the market because of the U.S. sanctions. Lifting those restrictions could make the situation far worse by dumping up to one million additional barrels of oil a day on the world market, The Wall Street Journal reported.

That could create chaos in the market because the world’s supply of oil already exceeds demand by around two million barrels a day, according to the International Energy Agency. Since basic economics tells us that increasing supply lowers prices, you can see where that situation would lead.

Uncertainty makes the situation worse because nobody knows exactly when the Iranian oil could hit the market or how much crude Iran would export. Experts think Iranian oil probably will not reach the markets until late 2015 or early 2016.

The havoc Iran could create in the oil market is vast though; consultant Bijan Khajehpour estimated that Iran has around 20 million barrels of oil in storage that it could start exporting as soon as tankers reached its harbors. To make matters worse, Khajehpour thinks the country could almost immediately start pumping 400,000 barrels a day and increase production to 900,000 barrels a day within a year.

If that were to happen, the oil glut would become an oil tidal wave that could swamp the major oil companies. What’s truly frightening for oil companies is that the flood of Iranian oil could reach international markets as early as mid-2016.

Why the Oil Glut May Not Go Away Anytime Soon

Iran would not be a problem if other countries were not already flooding the market with cheap oil. The biggest of these is Saudi Arabia, which was producing a record 10.14 million barrels of oil a day in May 2015, an increase from 9.69 million barrels a day in May 2014. This makes Saudi Arabia the real culprit for the oil glut and shows us why the oil glut may not go away anytime soon.

Saudi Arabia has actually refused to cut production despite pressure from other members of OPEC, CNN Money reported. The reason the Saudis are not cutting production is that they need oil revenue to keep their country going; Saudi Arabia already has a budget deficit that equals 20% of its Gross Domestic Product, and the royal family is considering slashing government spending by 10%.

The only way Saudi Arabia can avoid further budget cuts, which could lead to political unrest and bring down the royal family, is to sell more oil. The more oil they sell, the lower price drops, so they have to sell even more oil to cover the losses, causing the price to drop further.

To make matters worse, Saudi Arabia has also started issuing bonds in an attempt to finance the country with debt financing. The Saudis issued around $10 billion worth of bonds last year. Guess how those bonds are supposed to be paid—with oil revenues. The bonds provide yet another incentive for the Saudis to keep pumping.

Now, to make matters worse, Iran, which needs to shore up its weak economy, is about to join the party. Iran’s oil minister, Bijan Namdar Zanganeh, told Bloomberg that his country has no plans to restrict production. On the contrary, it plans to pump more in an attempt to recover lost market share. Translation: Iran is planning to dump oil on the market in order to raise cash fast.

The amount of oil Iran could dump could do some real damage. Mr. Zanganeh claimed his country has around 60 million barrels of crude in storage and could pump up to 3.9 million barrels a day by March 2016.

Can Major Oil Companies Weather the Storm?

The available evidence indicates that the oil glut is probably here to stay for the foreseeable future and could get worse. Naturally, investors will be wondering if oil companies can weather this storm.

The answer would seem to be yes; a quick look at the financials shows that major energy companies have the resources to survive the oil glut. The revenue figures show us that the giants are still making a lot of money: Royal Dutch Shell still reported revenues of $346.79 billion (€306.89 billion) on June 30, 2015, BP (NYSE: BP reported a revenue figure of $286.58 billion (€253.61 billion) on the same day, Exxon Mobil reported a TTM revenue of $335.25 billion (€296.68 billion) and Chevron had a revenue of $175.68 billion (€155.47 billion) at the end of June.

The major oil companies are still generating a vast amount of revenue despite the oil glut, but are they still profitable? That depends on which one of them you look at. BP reported a negative profit margin of -9.42% and a negative net income of -$6.338 billion (€5.61 billion) on June 30, while Exxon Mobile reported a profit margin of 5.65% and a net income of $23.77 billion (€21.04 billion) on the same day. Chevron reported a profit margin of 1.41% and a net income of $12.2 billion (€10.8 billion), and Shell achieved a profit margin of 5.39% and $13.47 billion (€11.92 billion).

The numbers show us that three of these major oil producers are still very healthy companies that are making a lot of money. These companies have the resources to survive and remain profitable in spite of the growing oil glut and the potential menace from Iran.

Not surprisingly, many people will wonder if the major oil producers are bargain stocks right now. My suggestion would be to hold off buying oil shares until we see what happens with Iran. You should wait because it is highly probable that the price of both oil and oil shares will keep falling for months to come. Despite the oil glut, oil prices might be nowhere near the bottom.

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