Iran war: BP sees ‘exceptional’ oil trading result as crude costs soar
Oil giant BP has said it is now set for an “exceptional” oil trading result in the first three months of the year after the Iran war sent the cost of crude soaring.
The FTSE 100 firm upgraded its first quarter oil trading guidance, which follows a “weak” out-turn for the division in the final quarter of 2025. BP said it was seeing “impacts associated with the ongoing situation in the Middle East and the current market conditions resulting in heightened volatility in crude oil, natural gas and refined products prices in the latter part of the first quarter”.
“These market conditions are expected to impact financial results, including trading results and working capital movements,” it added, pointing to an increased impact of so-called price lags.
Oil prices have surged higher since the US-Israel war on Iran started on February 28 and are now more than 60 per cent up so far this year. Brent crude reached close to 120 US dollars a barrel at one stage and is still hovering around the 100 dollars level as peace talks falter and amid fears over a looming global energy supply crisis.
BP said Brent crude prices averaged 81.13 dollars a barrel over the first quarter as a whole, which includes just over four weeks of volatility caused by the Middle East conflict. This is up sharply from 63.73 dollars a barrel in the previous three months. Every one dollar movement per barrel in oil prices leads to a $340m (£251m) impact on pre-tax operating profits, according to BP.
BP said upstream production was now expected to be broadly flat compared with the previous quarter, while oil production would be slightly lower, adding that net debt was set to increase to between $25bn and $27bn (£18.5bn to £20bn), up from $22.2bn (£16.4bn) in the fourth quarter. The firm will report first quarter figures on April 28.
Susannah Streeter, Chief Market Strategist, Wealth Club, said: “Talk of more negotiations over the Middle East conflict has lifted hopes of a resolution. Oil prices have nudged lower and optimism has returned, giving equity markets a lift. Investors appear willing to take on more risk and deploy capital amid expectations that the crisis will calm. After strong gains on Wall Street and positive sentiment across Asian markets, the FTSE 100 has opened higher, although caution remains.
“While the key Strait of Hormuz remains blockaded, with the US accusing Iran of economic terrorism, there are signs that behind-the-scenes negotiations are being prepared between Tehran and Washington ahead of the end of the fortnight-long ceasefire in a week’s time. In addition, Israeli and Lebanese ambassadors are scheduled to meet in Washington, a key development given Tehran’s insistence that any ceasefire must include a cessation of all strikes.”
“The duration of restrictions on Iran’s nuclear activity appears to be a major sticking point. The US is reportedly calling for a 20-year halt to development, while Iran is only willing to concede five years. So, while the door appears open to a deal, particularly given political pressure in the US, there remains a significant gap between the positions of both sides. As a result, the squeeze on energy supplies is likely to remain a disruptive force, and markets may stay jittery.
“BP’s trading update reflects this uncertainty, with the company highlighting that volatile commodity markets will be a key feature of its first-quarter results.
"Its trading division is expected to deliver an exceptional performance, driven by crude prices hitting hot levels amid the Iran war and the scramble for supplies of oil, natural gas, and refined products.”