BP hails ‘exceptional’ trading as oil prices soar in Iran war | BP
BP expects to post “extraordinary” gains from its oil trading desk, marking a windfall from volatile energy markets triggered by the US-Israeli war against Iran.
Energy traders are facing severe market volatility after Tehran effectively closed the key strait of the Hormuz shipping route.
BP said on Tuesday that refining margins had strengthened and “the oil trading result is expected to be outstanding” in the first quarter of the financial year.
Last week, UK rival Shell said it expected “significantly higher” oil trading profits for the quarter after weeks of market volatility.
As analysts raised their profit forecasts, US bank Citi raised its forecast for BP by 20% to $2.6 billion in adjusted net income for the January-March quarter.
Brent crude rose sharply from around $61 a barrel in January and reached $119.50 a few weeks ago after the strait was effectively closed. The global oil benchmark rose above $100 a barrel again on Monday and fell 1% to $98.28 a barrel on Tuesday.
Brent averaged about $78 per barrel in the January-March quarter, according to Reuters, compared to $63 per barrel in the fourth quarter and $75 per barrel in the same period last year.
Analysts at JP Morgan Chase expect oil prices to remain above $100 a barrel in the second quarter, while Goldman Sachs lowered its forecast last week to an average of $90 a barrel from $99.
BP’s update comes after the International Energy Agency lowered its forecasts for global oil demand this year. In its latest oil market report, it warned that both supply and demand will decrease due to conflict in the Middle East.
Oil demand is forecast to fall by 80,000 barrels per day this year, while last month the IEA predicted demand would rise by 640,000 barrels. This would be the first annual decline since the 2020 Covid outbreak.
The group also said global oil supplies fell by more than 10 million barrels per day in March to 97 million barrels. It was stated that the ongoing attacks on the energy infrastructure in the Middle East and the restrictions on tanker movements in the Bosphorus have caused the greatest disruption in history.
BP expects overall oil and gas production to remain broadly stable in the first three months of the year. Refining margins rose to $16.9 per barrel in the first quarter from $15.2 per barrel in the previous three months. This is expected to increase revenues from refined products from $100 million to $200 million. BP will announce its first quarter results on April 28.
Meg O’Neill, who this month became the company’s fifth chief executive since 2020, vowed to continue her predecessor’s shift from low-carbon projects to oil and gas to boost profitability. He will face shareholders at the annual meeting on April 23.
