BP has announced that its profits have reached their highest level in almost 18 years, a surge attributed to the ongoing conflict in the Middle East which has driven up oil and gas prices. The energy company described the third quarter as a "banner period," with its underlying replacement cost profit nearly quadrupling to $8.46 billion (£6.3 billion) compared to $2.2 billion a year ago. This figure surpassed analyst expectations of $7.3 billion, marking the company's strongest quarterly performance since the $8.9 billion recorded in 2008.
The significant jump in earnings was primarily fueled by the oil refining business, where the spread between crude oil costs and refined fuel prices widened dramatically. BP reported earning nearly $47 for every barrel produced during this period. CEO Meg O'Neill told Bloomberg TV that the company successfully captured market opportunities through strong margins at its operated refineries. She noted that while global oil prices remain below 2022 peaks, pump prices for diesel and gasoline have hit record highs in the UK, Europe, and the US due to severe disruptions in Gulf region refineries and across Russia.
O'Neill highlighted the industry's "remarkable adaptability" in response to these challenges. She explained that refineries are operating near capacity to offset shortfalls, shipping routes have been altered to longer paths, and releases from strategic and commercial reserves are helping to bridge supply gaps. Despite global price fluctuations, fuel costs for consumers have risen sharply; estimates from the RAC indicate diesel prices in the UK have reached 198.79p per litre, while petrol averages 172.92p per litre, a significant increase from late February levels prior to the latest conflict.
The announcement has drawn sharp criticism from environmental groups. Jonathan Noronha-Gant of Global Witness condemned the profits as "obscene," arguing that polluters are cashing in on the war's fallout while civilians suffer and ordinary people struggle with rising living costs. Danny Gross of Friends of the Earth echoed these sentiments, noting that households are bracing for a cold winter while BP increases fossil fuel production and cuts investment in renewables.
BP stated it would use the excess cash flow generated by these earnings to fully settle remaining liabilities from the 2010 Deepwater Horizon oil spill. This follows a recent agreement providing Louisiana with an accelerated $350 million lump-sum payment to resolve claims and coastal damage litigation. Looking ahead, the company is expected to unveil a major strategy update on December 15 under O'Neill's leadership. Market observers anticipate plans to grow oil and gas production and potentially restart share buy-backs next year.
As part of its reorganization, BP is planning to sell its UK North Sea oil and gas assets in a deal valued between £2 billion and £2.5 billion. Strong interest has already been expressed in five major production hubs, including the Andrew and ETAP fields in the central North Sea, as well as the Glen Lyon, Clair, and Clair Ridge fields west of Shetland. Potential buyers identified include Neo Next+, Ithaca Energy, and Adura. Additionally, BP recently appointed Ian Tyler as its new chair following a search triggered by the departure of Albert Manifold, aiming to resolve years of boardroom instability.
Sources: The Guardian Business.