BP reported a more than doubling of profits in the first three months of the year, driven by a surge in oil prices following the outbreak of the Iran war. The energy giant posted profits of $3.2bn (£2.4bn) for the January-to-March period, far exceeding analyst expectations and the $1.38bn earned in the same quarter last year. The strong performance was largely attributed to an "exceptional" showing in its oil trading business.
The oil price has experienced sharp swings since the conflict began, with the key Strait of Hormuz—which carries about 20% of global oil and liquid natural gas supplies—effectively closed. Brent crude, the global benchmark, stood at around $73 a barrel before the war, spiked to nearly $120, and has since fluctuated between $100 and $110. This volatility widens the spread between buying and selling prices, boosting trading profits.
Profits in BP's customers and products division, which includes oil trading, surged to $2.5bn from just $103m a year ago. Chancellor Rachel Reeves commented that such profits underscore the need for the extended Energy Profits Levy, a windfall tax introduced in 2022 and extended by Labour to March 2030. However, the levy only applies to UK oil and gas extraction profits, while the majority of BP's earnings come from overseas operations.
This is BP's first results under new CEO Meg O'Neill, who took over in April. She noted the "conflict and complexity" in the industry and said BP is working with customers and governments to minimize disruption. However, upstream production remained flat, and BP expects a dip in output between April and June due to Middle East disruption.
BP's share price rose 3% on Tuesday and is up about 20% since the Iran war began. Analysts noted that while BP's trading division thrived on volatility, production facilities are not immune to regional damage. Environmental groups criticized the results, with Friends of the Earth's Mike Childs highlighting that ordinary people bear the cost of soaring energy prices, and urged investment in renewables and energy efficiency.
For now, UK household bills are protected by the energy price cap at £1,641 annually for typical dual-fuel direct debit customers until June 30. However, rising wholesale prices are expected to push the cap up by about £200 when revised in July.