BP profits jump to $8.46bn on higher refining margins as Middle East conflict lifts prices
BP's third-quarter underlying replacement cost profit rose to $8.46bn from $2.2bn a year earlier, beating analyst forecasts, as refining and trading results surged.
At a glance
- BP's third-quarter underlying replacement cost profit rose to $8.46bn from $2.2bn a year earlier, beating analyst forecasts of $7.33bn.
- BP attributed the rise mainly to significantly higher refining margins and a much stronger gas and marketing trading result.
- BP will use excess cashflow to cover remaining Deepwater Horizon liabilities of $5.94bn and set out a strategy update on 15 December.
BP has reported a jump in third-quarter profits, saying the war in the Middle East drove up oil and gas prices and led to "significantly higher" trading.
The energy company said on Friday that underlying replacement cost profit — a key measure of its income — rose to $8.46bn, up from $2.2bn a year earlier. Analysts had expected profits of $7.33bn.
BP said the increase "mainly reflects significantly higher realised refining margins and significantly higher gas and marketing trading result".
Refining drives the gains
Higher profits from oil refining underpinned the quarterly earnings. Although global oil prices have remained below the peaks recorded during the 2022 energy crisis, pump prices for fuels including diesel have soared to all-time highs across the UK, Europe and the US in recent months, because of severe disruptions to refineries in the Gulf region and across Russia.
Meg O'Neill, the chief executive of BP, said: "These are dynamic times with volatility and disruption to trade flows continuing to define energy markets. The industry as a whole has been showing remarkable adaptability." She added that refineries have been running close to capacity to make up for shortfalls, that shipping has been taking different and longer routes, and that releases from strategic and commercial reserves are helping bridge supply gaps.
Campaigners criticise the windfall
The rise in profits angered climate campaigners. Danny Gross, of Friends of the Earth, said: "As millions of households brace themselves for a cold winter huddling under blankets and clutching hot-water bottles as they struggle to pay their bills, BP is raking in huge profits while doubling down on gas and oil production and slashing investment in renewables."
The figures follow strong results across the sector. Shell and the French oil rival TotalEnergies reported their strongest profits since 2022, also largely driven by refining crude into fuel products such as diesel. The Guardian reported that the US-Israeli war on Iran has boosted profits for oil majors, leading to questions over how they will allocate the extra cash.
Deepwater Horizon and strategy
BP said it would use the excess cashflow generated by earnings to address remaining liabilities in full from the Deepwater Horizon oil spill in 2010. Deepwater Horizon payables and provisions stood at $5.94bn, according to BP data.
BP is expected to set out its first major strategy update under O'Neill on 15 December. Market observers expect it to outline plans to grow the company's oil and gas production and potentially restart share buybacks from next year.
Source: The Guardian Business.
Questions and answers
- How much profit did BP make in the third quarter?
- BP reported underlying replacement cost profit of $8.46bn, up from $2.2bn a year earlier. That was above the $7.33bn analysts had expected.
- Why did BP's profits rise?
- BP said the increase mainly reflected significantly higher realised refining margins and a significantly higher gas and marketing trading result, as the Middle East conflict lifted oil and gas prices.
- What is BP doing with the extra cash?
- BP said it would use excess cashflow to address remaining liabilities in full from the 2010 Deepwater Horizon oil spill, where payables and provisions stood at $5.94bn. It is due to publish a strategy update on 15 December.
