BP quarterly profit jumps to $8.46bn as refining margins surge

By Nathan Brooks

BP said on Friday that third-quarter underlying replacement cost profit, a key measure of its income, jumped to $8.46 billion from $2.2 billion a year earlier. BP reported that analysts had expected $7.33 billion. That put the result $1.13 billion above the forecast and at about 3.8 times the year-earlier figure.

Refining and trading powered the jump

The U.S.-Israeli war on Iran drove up oil and gas prices and produced significantly higher trading, BP said. BP attributed the profit jump mainly to significantly higher realised refining margins and a significantly higher gas and marketing trading result.

Global oil prices remained below their peaks during the 2022 energy crisis. Yet pump prices for diesel and other fuels hit all-time highs across the UK, Europe and the US in recent months. BP cited severe disruptions at refineries in the Gulf region and across Russia.

For BP, the main gain came from refining margins and trading, not simply higher benchmark crude. Global oil prices remained below the 2022 peaks, yet refining margins and gas and marketing trading results rose sharply.

Energy markets remain defined by volatility and disruption. Meg O’Neill, BP’s chief executive, said:

“These are dynamic times with volatility and disruption to trade flows continuing to define energy markets. The industry as a whole has been showing remarkable adaptability. Refineries have been running close to capacity to make up for shortfalls, shipping has been taking different and longer routes, and releases from strategic and commercial reserves are helping to bridge supply gaps.”

For energy traders, O’Neill’s account points to persistent volatility rather than a return to 2022’s peak oil prices. Near-capacity refineries, rerouted shipping and reserve releases are managing shortfalls while fuel prices reach records.

The earnings surge was not isolated to BP. Shell and French energy major TotalEnergies reported their strongest profits since 2022, also driven largely by refining crude into products such as diesel. For the sector, refining margins have become the clearest near-term profit engine, not merely higher crude prices.

The windfall drew criticism from climate campaigners. Danny Gross of Friends of the Earth said: “As millions of households brace themselves for a cold winter huddling under blankets and clutching hot-water bottles as they struggle to pay their bills, BP is raking in huge profits while doubling down on gas and oil production and slashing investment in renewables.”

BP said on Friday it would use excess cash flow generated by its earnings to address all remaining liabilities from the 2010 Deepwater Horizon oil spill. BP data put spill payables and provisions at $5.94 billion. That puts the spill settlement ahead of any new shareholder payout in BP’s stated cash priorities.

What does BP’s windfall change for shareholders?

The immediate change is a stated use for the cash, not a new capital-return plan. BP says excess cash flow will go toward the remaining spill liabilities, while any renewed buyback remains prospective.

BP is scheduled to set out its first major strategy update under O’Neill on December 15. Market observers expect the update to address two priorities:

• Plans to grow oil and gas production.
• A potential restart of share buybacks from next year.

BP had not confirmed either move on Friday. Shareholders therefore have an earnings windfall and a stated spill commitment, but no confirmed new payout.

For fuel buyers and energy investors, the practical shift is a refined-products squeeze. Record diesel prices and refinery outages are lifting BP and its peers’ margins while households absorb higher pump costs.

The December 15 update will show whether BP converts the conflict-driven windfall into more upstream output, a share-buyback restart or both. BP has said excess cash will address the remaining Deepwater Horizon liabilities, leaving capital returns as the central shareholder question.