BP's profit quadruples amid the war with Iran: refining margins and debt reduction

Quarterly results

BP said on Friday that its profit attributable to shareholders for the period from July to September rose to $4.7 billion (€4.2 billion) — four times more than the $1.16 billion a year earlier. The underlying replacement cost measure, which investors focus on, almost quadrupled to $8.5 billion (€7.6 billion) from $2.2 billion, significantly exceeding analysts' expectations of $6.2 billion. The measure excludes fluctuations in the value of oil inventories and one-off items, including write-downs of $4 billion this quarter, mostly related to 'transition businesses' (euronews).

Why profits rose

Like its competitors, BP earned on refining margins — the difference between the price of purchased crude and the revenue from fuels such as diesel. The war with Iran effectively cut off fuel exports from the Middle East, and refineries in other regions are benefiting from the limited global supply. CEO Meg O'Neill, who took over the company in April, called it 'a strong set of results, supported by an environment of higher prices and higher margins.' Shell and TotalEnergies similarly reported high profits on Thursday.

Debt and Deepwater Horizon obligations

BP's net debt fell to $13.9 billion (€12.4 billion) from $22.3 billion three months earlier — helped by the suspension of share buybacks in February to strengthen the balance sheet. The company said it had met its debt and cost reduction targets and kept the quarterly dividend at 8.66 cents per share. BP also said it intends to direct free funds primarily to the remaining obligations from the Deepwater Horizon platform disaster — the 2010 explosion and oil spill in the Gulf of Mexico that killed 11 workers — after agreeing last week to accelerate payments under the $16 billion (€14.3 billion) settlement with the state of Louisiana.

Oil market and company plans

Brent traded at around $113.6 per barrel on Friday morning, up about 2.5% over the week, after falling more than 6% on Monday amid what appeared to be a diplomatic push around the war. That is still well above the roughly $72 per barrel before the war began in late February. West Texas Intermediate stood at about $104.2 per barrel. BP raised its planning price for valuing assets to $87 per barrel this year from $70 previously (inflation-adjusted to 2024 prices) and expects Middle East supply disruptions to persist until 2027, with refining margins 'remaining elevated' in the final quarter. O'Neill will present her strategy on December 15; BP, long seen as lagging behind its competitors, has already cut spending on clean energy in favor of more profitable oil and gas. BP shares rose 0.3% on Friday.