BP Profit Hits 18-Year High of $8.46B as Iran War Lifts Refining
BP's underlying profit almost quadrupled to $8.46 billion, its highest since 2008, as the Iran war lifted refining margins and drew campaigner criticism.
BP posted its biggest quarterly profit in 18 years on Friday, as the war involving the United States, Israel and Iran disrupted energy markets and sharply widened the money the British oil company makes from turning crude into fuel. Underlying replacement cost profit, the company’s preferred earnings measure, reached $8.46 billion for the three months ended Sept. 30, up from about $2.2 billion a year earlier, according to its results filing. The Guardian reported that it was the company’s highest quarterly figure since $8.9 billion in 2008.
What happened
The result beat the $7.33 billion consensus in an analyst poll compiled by the company, Yahoo Finance UK reported. The measure strips out inventory swings and one-off items, so it differs from the bottom line. Profit attributable to shareholders was $4.7 billion, up from $1.16 billion a year earlier, after net impairment charges of about $4.1 billion, BP said in its filing with the U.S. Securities and Exchange Commission.
Most of those write-downs fell on what BP calls its transition businesses, including its solar developer Lightsource bp and offshore wind.
The gains came largely from fuel rather than from drilling. BP’s refining indicator margin, a benchmark of what its refineries earn on each barrel processed, averaged $46.70 in the quarter, compared with $15.80 a year earlier. Its customers and products division, which houses refining and oil trading, accounted for $6.95 billion of pre-tax underlying profit, about four times the year-earlier level.
Meg O’Neill, BP’s chief executive, told Bloomberg TV, in remarks cited by The Guardian, that the company was able to “capture the opportunity provided by the market.” The German news agency DPA reported that O’Neill said the refineries had been “running close to capacity” to keep supplies flowing. The company also pointed to “significantly higher” trading results.
Why it matters
The windfall has rapidly repaired a balance sheet that had weighed on BP. Net debt fell by $8.4 billion during the quarter to $13.9 billion, hitting the company’s reduction target a year ahead of schedule, Yahoo Finance UK reported. Net debt stood at about $26.1 billion a year earlier. Operating cash flow was $14.8 billion.
BP plans to direct surplus cash toward what remains of its bill for the 2010 Deepwater Horizon rig explosion and oil spill in the Gulf of Mexico, which Yahoo Finance UK put at $5.94 billion in outstanding payables and provisions. The Guardian reported that BP agreed last week to pay Louisiana an accelerated lump sum of $350 million and settled litigation over coastal damage brought by local parishes.
The same conditions are squeezing consumers. DPA reported that the Strait of Hormuz, the Gulf shipping route, remains closed. In the United Kingdom, gasoline averaged 172.92 pence a liter, up from 132.83 pence in late February, before the conflict began, according to RAC estimates cited by The Guardian. The newspaper said pump prices have hit records in the U.K., Europe and the U.S. even with crude below its 2022 peaks, because of refinery disruptions in the Gulf and Russia.
Criticism and competing views
Environmental groups seized on the numbers. Jonathan Noronha-Gant of Global Witness, an international campaign group, called it “obscene” that polluters were profiting from the war. The group said BP’s result brings combined profits at Europe’s six largest oil companies to $89 billion so far this year, DPA reported. Danny Gross of the environmental group Friends of the Earth said BP was “raking in huge profits” while cutting investment in renewables, according to The Guardian.
O’Neill has framed the results around operational execution, with BP’s refineries running hard during a period of disrupted supply. Campaigners want higher taxes on the sector, but the British government’s budget this week left levies on oil and gas companies unchanged, DPA reported.
BP is not alone. Shell reported quarterly profit of $10.81 billion on Thursday, according to DPA, and The Guardian said Shell and TotalEnergies each posted their strongest results since 2022, also driven largely by refining.
What comes next
BP is due to deliver its first major strategy update under O’Neill on Dec. 15. The Guardian reported that observers expect it to lay out plans to grow oil and gas production and possibly to restart share buybacks next year. BP repurchased no shares in the third quarter and declared a dividend of 8.66 cents per ordinary share, payable Dec. 18.
The company is also reshaping itself. Its filing anticipates about $8 billion in divestment and other proceeds this year, including about $6 billion from the sale of its Castrol lubricants business stake. It is also seeking a buyer for its U.K. North Sea oil and gas assets, a sale The Guardian estimated at 2 billion to 2.5 billion pounds. Leadership has changed as well: Ian Tyler became chair last month, after Albert Manifold was ousted in May.
