- BP told investors that its Q1 trading and refining performance will be “exceptional” thanks to the extreme oil price swings caused by the Iran war. Analysts at Citi raised earnings forecasts by about 20 %, expecting higher refining margins and profits from BP’s commodities desk.
- New chief executive Meg O’Neill has been redirecting spending away from some low‑margin renewables and towards upstream oil and gas projects and trading. This strategy reflects a broader pivot among European majors to maximise returns from hydrocarbons while energy prices are high.
- BP said refining margins improved in the first quarter, buoyed by strong diesel and jet fuel cracks, though net debt is expected to rise modestly. The company warns that refining margins could normalise later in the year.
BP on Tuesday signalled that its first‑quarter results would be “exceptional” thanks to a stellar performance from its oil trading desk and improved refining margins.
Analysts at Citi responded by raising their earnings forecasts by roughly 20%, noting that the British group should benefit from elevated price differentials for jet fuel and diesel. The company said net debt would rise slightly because of seasonal working‑capital requirements, but that profit growth would remain strong.
Behind the bumper results lies a deliberate strategy shift. New chief executive Meg O’Neill, who took over in January, has started to prioritise higher‑return hydrocarbon investments after her predecessor’s push into renewables disappointed investors.
O’Neill has emphasised that oil and gas will remain at the heart of BP’s portfolio for decades, arguing that the company must deliver energy security and shareholder returns before scaling up low‑carbon businesses. Analysts say the pivot reflects pressure from investors who see more value in hydrocarbons while the Iran conflict keeps markets tight.
BP’s trading arm – historically one of the industry’s most sophisticated – has capitalised on wild price swings as the US blockade of Iranian ports disrupted flows through the Strait of Hormuz. Traders bought cheap barrels earlier in the crisis and sold into the rally as Brent crude briefly broke above $110 before retreating. The company’s strong books mirror those of rivals Shell and TotalEnergies, which have also reported robust trading results this year.
However, BP’s shift back to oil carries risks. The company must balance investor demand for returns with growing public and political scrutiny over high profits. In the UK, energy firms already face a windfall tax on extraordinary profits from North Sea production; a surge in trading income could rekindle calls for broader levies.
There is also reputational risk: environmental campaigners argue that the supermajors are exploiting the crisis while delaying investment in renewable energy.
From a UK perspective, BP’s earnings surge matters because it underscores how volatility can benefit companies with sophisticated trading operations. It also signals that the energy transition may slow as firms chase profits from hydrocarbons.
For policymakers, the episode highlights the difficulty of aligning climate goals with economic pressures. The windfall offers an opportunity to channel some profits into domestic energy‑security projects, but it could also reinforce calls for stronger regulation and accelerated investment in low‑carbon technologies to reduce exposure to geopolitical shocks.
