BP reported its strongest quarterly profit in almost two decades on Friday, as disruptions linked to the war in the Middle East lifted oil and gas prices and widened margins for refined fuels. The company’s underlying replacement cost profit, a key measure of its income, rose to $8.46 billion from $2.2 billion a year earlier.
The result was well above the $7.3 billion analysts had expected and represented nearly a fourfold increase from the same period last year. BP’s quarterly profit was the highest since the company recorded $8.9 billion in 2008, according to the figures reported by The Guardian.
Refining drives the increase
BP’s refining business provided the main boost. The difference between the cost of crude oil and the selling price of products such as gasoline and diesel rose sharply, generating almost $47 for every barrel of fuel produced. The company said its BP-operated refineries benefited from strong margins as supply disruptions affected refineries in the Gulf region and across Russia.
Meg O’Neill, BP’s chief executive, described the period as a “banner quarter” for refining in remarks to Bloomberg TV. She said the company was able to take advantage of market conditions while maintaining what she characterized as strong underlying performance.
“It really was a banner quarter for the refining business. We had very strong margins from the BP-operated refineries, we also had very strong underlying performance. We were able to capture the opportunity provided by the market.”
O’Neill also said the oil and gas industry had adapted to a more disrupted supply environment. According to her comments, refineries were operating close to capacity to compensate for shortfalls, shipping companies were using longer and different routes, and strategic and commercial reserves were helping bridge gaps in supply.
Higher margins reach fuel markets
The earnings increase comes as motorists face higher prices for refined fuels even though global oil prices remain below the peaks reached during the 2022 energy crisis. The Guardian reported that severe disruptions at refineries in the Gulf region and across Russia have contributed to record pump prices for some fuels in the United Kingdom, Europe and the United States in recent months.
| Measure | Reported figure |
|---|---|
| Underlying replacement cost profit | $8.46 billion |
| Underlying replacement cost profit a year earlier | $2.2 billion |
| Analyst expectation | $7.3 billion |
| Profit benchmark from 2008 | $8.9 billion |
| Refining margin reported | Almost $47 per barrel |
In the UK, the RAC estimated diesel prices at 198.79 pence a liter, while average gasoline prices reached 172.92 pence a liter. The gasoline figure compared with 132.83 pence a liter in late February, before the conflict in the Middle East began, according to the report.
Conflict raises scrutiny of energy profits
BP’s result is likely to intensify scrutiny of energy companies benefiting from supply disruptions and elevated fuel costs. Climate campaigners criticized the scale of the profit increase as households and businesses contend with more expensive transportation fuels.
The earnings also illustrate how a company’s results can diverge across its businesses during an energy shock. Higher crude and gas prices can increase revenue in parts of an integrated energy company, while disruptions to refining capacity can produce even larger gains for the facilities that continue operating. BP’s figures show that the refining spread, rather than a simple change in the global oil price, was central to the quarter’s performance.
