Photo caption: BP logo
BP reported a sharp rebound in first-quarter earnings, with underlying replacement cost (RC) profit rising to $3.2 billion, more than doubling from the previous quarter, as strong oil trading and refining margins offset geopolitical and operational headwinds.
The London-based supermajor delivered a markedly improved financial performance compared with late 2025, when earnings were weighed down by weaker trading and impairments. Reported profit reached $3.8 billion for the quarter, compared with a loss in the prior period.
The primary driver of the earnings uplift was an “exceptional” contribution from oil trading alongside stronger results in refining and midstream operations. Higher realized refining margins and improved throughput—helped by reduced maintenance activity and recovery at key assets—boosted downstream profitability significantly.
BP’s customers and products segment delivered a standout performance, with underlying profit surging on both refining strength and supply optimization gains across its integrated value chain.
Upstream operations remained stable, with production broadly flat as stronger output in the Gulf of America and from U.S. onshore assets offset disruptions in the Middle East and the impact of a North Sea divestment. Reliability across upstream assets improved slightly to 95.7%, while refining availability exceeded internal targets.
Operating cash flow came in at $2.9 billion, weighed down by a substantial $6 billion working capital build driven by higher prices, longer shipping routes, and seasonal inventory effects.
Net debt rose to $25.3 billion from $22.2 billion in the previous quarter, reflecting the lower cash generation after working capital movements.
Despite the increase in debt, BP reiterated its commitment to balance sheet strengthening, targeting net debt in the $14–18 billion range by 2027. The company also plans to reduce hybrid bond financing by approximately $4.3 billion over the same period.
BP maintained its quarterly dividend at 8.32 cents per share and reaffirmed its capital expenditure guidance of $13–13.5 billion for 2026.
During the quarter, BP continued to advance its portfolio optimization strategy, including an agreement to sell its Gelsenkirchen refinery. The move is expected to support an increase in its structural cost reduction target to between $6.5 billion and $7.5 billion by 2027.
BP’s results underscore the continued importance of trading and downstream flexibility in navigating volatile energy markets. The strong trading contribution mirrors a broader trend among oil majors leveraging integrated portfolios to capture value from price dislocations and logistical disruptions.
At the same time, the company flagged ongoing operational challenges, including disruptions in the Middle East, highlighting the persistent geopolitical risks affecting global supply chains.
The significant working capital build also reflects a higher-price environment and longer shipping routes—both indicative of tightening logistics and shifting trade flows amid geopolitical tensions.
While BP did not materially revise its outlook, the results suggest resilience in its core businesses, particularly refining and trading, even as macroeconomic and geopolitical uncertainty continues to shape the sector.
=== Oilprice.com ===
