By Ahmed Abdelsalam
BP reported a sharp rise in third-quarter profits on Friday as the war in the Middle East drove up oil and gas prices and led to significantly higher trading results. The energy company said underlying replacement cost profit, a key measure of income, rose to $8.46 billion, up from $2.2 billion a year earlier and above analyst expectations of $7.33 billion.
Refining Margins Drive Earnings Jump
The profit increase mainly reflects significantly higher realised refining margins and a significantly higher gas and marketing trading result, BP said. Although global oil prices remain below the peaks seen during the 2022 energy crisis, pump prices for fuels including diesel have soared to all-time highs across the UK, Europe and the United States in recent months because of severe disruptions to refineries in the Gulf region and across Russia.
Industry Adaptability Amid Volatility
Meg O'Neill, BP's chief executive, said the industry has shown remarkable adaptability. Refineries have been running close to capacity to make up for shortfalls, shipping has taken different and longer routes, and releases from strategic and commercial reserves are helping to bridge supply gaps.
Climate Campaigners Criticise Windfall
The jump in profits angered climate campaigners. Danny Gross of Friends of the Earth said millions of households are bracing for a cold winter struggling to pay bills while BP rakes in huge profits and doubles down on oil and gas production while slashing investment in renewables.
Peers Also Report Strong Results
BP's earnings windfall follows similar strong results from Shell and French rival TotalEnergies, which reported their strongest profits since 2022, also largely thanks to profits from refining crude into fuel products such as diesel.
Excess Cash to Address Deepwater Horizon Liabilities
BP said it would use excess cashflow generated by earnings to address remaining liabilities in full from the 2010 Deepwater Horizon oil spill. Deepwater Horizon payables and provisions stood at $5.94 billion, according to BP data.
Strategy Update Expected in December
The company is expected to set out its first major strategy update under O'Neill on 15 December, which market observers expect will outline plans to grow oil and gas production and potentially restart share buybacks from next year.
