BP Doubles Profits as Strait of Hormuz Closure Drives Oil Prices Up
The global oil powerhouse BP has smashed expectations by more than doubling its profits in the first quarter of its financial year. The surge stems from skyrocketing oil prices triggered by the Iran conflict, which disrupted the critical Strait of Hormuz—an essential artery for nearly 20% of the world’s oil and liquefied natural gas shipments.
Record-Breaking Earnings Defy Expectations
BP’s underlying profits soared to an impressive $3.198 billion (£2.366 billion), far surpassing analyst forecasts of $2.7 billion (£1.99 billion). This figure marks a striking increase from the $1.381 billion (£1.021 billion) recorded during the same period last year.
BP openly attributed this windfall to “exceptional oil trading,” a direct consequence of the volatile market conditions sparked by geopolitical tensions.
Oil Prices Remain Elevated, Profits Poised to Climb Further
Since early March, benchmark Brent crude has traded consistently above $100 a barrel. Remarkably, BP’s first-quarter profits reflect only one month of these elevated prices, with an average oil price of $82.80 per barrel during the period. This indicates the company has yet to fully capitalize on the recent price spikes, suggesting profits could climb even higher in the coming quarters.
BP also benefits from the geographic diversification of its production, with the majority located in North America. This shields it from direct disruptions caused by Middle Eastern instability, allowing the company to profit from soaring prices while limiting operational setbacks.
However, BP acknowledged that “production volumes and fuel margins remain sensitive to conditions and developments in the Middle East,” signaling potential volatility ahead.
BP’s share price responded positively, rising 2.5% in early trading on Tuesday.
Rising Energy Costs and the Impact on Households
The persistence of elevated oil prices threatens to exacerbate the cost-of-living crisis. Energy experts widely anticipate the energy price cap will increase by hundreds of pounds for the average household this July, intensifying financial pressures on consumers and businesses alike.
Taxation and the Energy Profits Levy
Despite record profits, BP remains subject to the energy profits levy, a windfall tax introduced following Russia’s invasion of Ukraine to curb excessive gains by fossil fuel companies. The levy pushed BP’s headline tax rate on its North Sea operations to a staggering 78%.
Energy Secretary Ed Miliband condemned the profiteering, stating, “Profiting from a crisis is morally and economically wrong.” He emphasized that taxing these windfall profits is crucial to funding government support measures aimed at alleviating the cost-of-living squeeze.
Overall, BP revealed its effective tax rate dropped to 43% this year from 69% during the same period in 2025, indicating a complex tax landscape despite the levy.
Environmental Groups Decry BP’s Windfall
The profit announcement sparked sharp criticism from environmental advocates. Greenpeace climate campaigner Maja Darlington condemned the oil industry’s “almost limitless” capacity to profit from global crises.
Similarly, Patrick Galey, head of news investigations at NGO Global Witness, accused oil companies of “destroying the climate, pushing up the cost of living, and raking in billions in profit while innocent civilians die.” He called for accountability, stating, “If they broke it, they need to fix it. It’s clear they can afford to.”
