BP expects soaring oil prices to deliver another boost to its trading business, but the energy giant has warned it will also take a £740 million ($1 billion) write-down and produce less oil as conflict in the Middle East continues to disrupt operations.
The FTSE 100 heavyweight said its oil trading division is set to perform “slightly higher” than in the first quarter, when its customers and products business generated profits of $2.5 billion (£1.87 billion).
That marked a sharp jump from $1.4 billion (£1.04 billion) in the previous quarter and just $103 million (£77 million) during the same period last year, underlining how volatile energy markets have boosted trading profits.
However, the upbeat trading outlook was tempered by news that BP expects to record a $1 billion impairment charge linked to its so-called transition businesses as it continues shifting its focus back towards its core oil and gas operations.
The write-down follows an even larger $5 billion (£3.74 billion) impairment announced at the end of 2025, when BP began scaling back parts of its low-carbon and gas transition portfolio.
The company stressed the latest charge will be excluded from its underlying replacement cost profit when it reports second-quarter earnings on August 4.
BP also warned that oil and gas production is expected to decline to between 2.17 million and 2.22 million barrels of oil equivalent per day, down from 2.34 million barrels in the first quarter.
The company blamed the fall on planned seasonal maintenance as well as “the effects of disruption in the Middle East”, where renewed tensions have once again shaken global energy markets.
Despite the production decline, investors welcomed the prospect of stronger trading profits.
BP shares rose around 3 per cent after the update, helped by another sharp rise in crude oil prices.
Brent crude climbed more than 4 per cent to above $86 (£64) a barrel as fears over supplies returned following renewed tensions involving the United States and Iran.
Oil prices had briefly retreated after Washington and Tehran agreed an interim peace deal that reopened the Strait of Hormuz, but uncertainty surrounding the vital shipping lane has once again pushed prices sharply higher.
The Strait of Hormuz remains one of the world’s most important energy chokepoints, with roughly one-fifth of global oil and gas shipments normally passing through the narrow waterway.
Any threat to shipping through the Strait has immediate consequences for global fuel prices and energy markets.
BP’s trading update also comes during a turbulent period for the company itself.
Former chairman Albert Manifold was removed earlier this year following what BP described as “serious concerns” relating to conduct, oversight and corporate governance.
Mr Manifold has strongly denied the allegations, accusing critics of spreading “lies” and claiming his push for tougher cost-cutting and scrutiny of spending was not shared by others within the business.
Meanwhile, new chief executive Meg O’Neill, who took over in April following the departure of Murray Auchincloss, faces mounting pressure to restore investor confidence and improve BP’s performance after a difficult period for one of Britain’s biggest energy companies.
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