BP reported first-quarter profits of $3.2 billion on Tuesday, more than doubling its earnings from the same period last year, as the ongoing U.S.-Israel conflict with Iran drove oil prices sharply higher.
The results were far above what analysts had expected. A year ago, BP posted a profit of $1.38 billion for the January-to-March quarter. The surge came largely from the company's oil trading business, which the company called an "exceptional" performer. Its customers and products division, which includes that trading unit, brought in $2.5 billion in profit, up from just $103 million a year earlier.
The Iran conflict, which began on February 28, has strangled supply through the Strait of Hormuz, a critical chokepoint that normally carries roughly 20 percent of the world's oil and liquid natural gas. With that route effectively closed, Brent crude, the global benchmark, has climbed to around $110 a barrel from about $73 before the war started.
The results are the first under new chief executive Meg O'Neill, who took over in early April after her predecessor Murray Auchincloss departed following less than two years in the role. O'Neill acknowledged she had stepped into the top job "at a time when our industry is operating in an environment of conflict and complexity," and said BP had been working with customers and governments to move fuel where it was needed.
Not every part of the business performed well. BP's upstream production, which covers the search and extraction of oil and gas, was flat during the quarter. The company also warned that production in the second quarter, from April through June, would likely be lower, partly because of disruption in the Middle East.
Charles Hall, head of research at Peel Hunt, said BP was being cautious about the months ahead. The strong trading performance was "probably going to last a little bit longer," he said, but added: "There are other things going on and obviously it's a pretty uncertain world at the moment."
Environmental groups were swift to criticize the figures. Mike Childs, head of science, policy and research at Friends of the Earth, said the results echoed what happened in 2022 when Russian's invasion of Ukraine sent fuel prices soaring. "Fossil fuel giants are quids-in when global instability drastically inflates fuel prices," Childs said. "But again, it's ordinary people who pay the price when soaring energy prices threaten to plunge the UK into an even deeper cost of living crisis." He called for greater investment in renewable energy and energy efficiency measures to reduce the country's exposure to future price shocks.
Energy firms operating in the UK are subject to a windfall tax introduced in 2022 following the Russia-Ukraine war, though that levy applies only to profits from extraction operations in UK waters, not trading gains of the kind that drove BP's results this quarter.
