BP has nearly quadrupled its quarterly profits as the US–Israeli war on Iran drives up energy prices. The company reported third-quarter underlying replacement cost profit of $8.46bn, against $2.2bn a year earlier. While households struggle to afford fuel, BP collects billions from selling it at higher margins.
Even the analysts underestimated the haul. They’d expected $7.33bn. BP said the increase “mainly reflects significantly higher realised refining margins and significantly higher gas and marketing trading result”.
Those refining margins matter. Global crude prices remain below their 2022 peaks, yet pump prices for fuels including diesel have reached record highs across the UK, Europe and the US. Severe disruption to refineries in the Gulf and across Russia has squeezed supplies of usable fuel. Companies with refining capacity still available can sell into that shortage and earn more from processing crude. Consumers aren’t simply reimbursing BP for more expensive oil; BP is making more profit from refining it.
Shell and TotalEnergies have also reported their strongest profits since 2022, drawing heavily on the same business. The oil giants have found a lucrative position between disrupted supplies and customers who still need fuel. Workers can’t bargain away their need to heat their homes or get to work. The companies selling these necessities can prosper while the people buying them cut back.
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.”
Workers pay these prices out of their wages, pensions and benefits. A household already struggling to meet its bills has to cut spending elsewhere or go without energy. BP’s shareholders face a different calculation: how much of the extra cash will strengthen the company, and how much might reach them?
BP chief executive Meg O’Neill offered her own account: “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.”
Refinery workers process the oil. Seafarers carry it along those longer routes. Other workers maintain the machinery, load the cargoes and distribute the fuel. BP pays wages and appropriates the surplus from their collective labour. Its shareholders take the profits because they own the company. The workers keeping fuel moving don’t decide whether BP spends the windfall on new production, old liabilities or payments to investors.
O’Neill’s account also strips the war of its perpetrators and victims. The US and Israeli governments wage an imperialist war on Iran; BP’s chief executive discusses trade flows, shipping routes and supply gaps. For the people under attack, the war threatens their lives. For BP’s management, the resulting disruption brings higher earnings.
BP has already identified one use for the money. It says it will use excess cashflow to address its remaining liabilities from the 2010 Deepwater Horizon oil spill in full. Its payables and provisions for that disaster stand at $5.94bn. A windfall from war will help the company settle the financial consequences of an earlier oil disaster.
O’Neill is due to present her first major strategy update on 15 December. Market observers expect plans to expand oil and gas production and potentially restart share buybacks next year. If BP resumes buybacks, it will spend company cash purchasing shares from investors. That would give shareholders another route to collect money from the business.
BP’s directors have a strong incentive to keep investing in oil and gas while the company makes such profits from it. Higher prices squeeze household budgets and make further production more attractive to investors. Campaigners warn about the climate consequences; BP’s owners count the returns.
The US and Israeli governments wage war, and the oil majors turn the disruption into billions in profit. Workers keep the refineries running and the fuel moving, then pay higher prices for the necessities they produce. Millions of households struggle to keep warm while BP’s bosses decide how to spend the windfall.
