BP profits hit ‘obscene’ 18-year high as Iran war drives up oil refining margins

BP’s underlying replacement-cost profit reached $8.46bn in the three months to the end of September. That was almost four times the $2.2bn recorded in the same period a year earlier. The result was BP’s strongest quarterly profit since 2008.

The main drivers were higher oil and gas prices linked to the war in the Middle East and a powerful refining market. BP earned much more from turning crude oil into products such as diesel and petrol. The gap between crude costs and fuel prices rose sharply, reaching almost $47 for each barrel produced.

The result matters because it arrived while drivers faced record fuel prices and households struggled with living costs. Climate campaigners criticised BP for profiting from fossil fuels during conflict and worsening climate disasters. BP called it a “banner quarter,” while governments faced pressure to protect people from high energy costs and climate risks.

An oil-refining margin is the difference between what a refinery pays for crude oil and what it receives for refined products. Those products include fuels such as petrol and diesel. A wider margin means a refinery can make more money from each barrel, even if the company’s total oil production does not change.

The article gives a striking example. BP earned almost $47 for each barrel produced because the gap between crude-oil costs and refined-fuel prices soared. Its operated refineries also delivered very strong margins and underlying performance. That made refining the biggest boost to the quarter’s earnings.

This matters because refining profits can rise when finished-fuel supplies are disrupted. Refineries in the Gulf region and Russia faced severe disruption, while demand for usable fuels continued. Drivers then paid more at the pump, and BP captured more value from processing crude into scarce fuel products.

BP’s underlying replacement-cost profit increased by about $6.26bn in one year. It rose from $2.2bn in the three months to the end of September a year earlier to $8.46bn in the latest quarter. That was almost four times higher and marked BP’s strongest quarterly profit since 2008.

Refining was central to the increase. BP said its operated refineries achieved very strong margins and underlying performance. The difference between the cost of crude oil and the selling price of refined fuels such as diesel and gasoline soared. BP earned almost $47 for each barrel produced, showing how profitable the processing stage became.

The figures show that BP’s earnings were not driven only by producing more oil and gas. Market conditions made refined fuels much more valuable. Refinery disruptions in the Gulf region and Russia helped push fuel prices higher, although global crude prices remained below their 2022 energy-crisis peaks.

Crude oil is only the starting material for fuels sold to motorists. It must be processed in refineries, and drivers ultimately pay for finished products such as petrol and diesel. If refining capacity is disrupted, those products can become scarce even when enough crude oil exists globally.

The article links recent pump-price increases to severe disruptions at refineries in the Gulf region and across Russia. Those problems reduced the supply of usable fuels and widened the difference between crude costs and refined-fuel prices. BP’s refining business benefited, earning almost $47 per barrel, while motorists paid more.

In the UK, diesel reached 198.79p a litre and petrol averaged 172.92p. Petrol had been 132.83p in late February, before the latest Middle East conflict began. The figures show why crude prices alone do not determine pump prices: refining capacity, fuel availability, and regional disruption also matter.

Refineries convert crude oil into usable products, so crude supply and finished-fuel supply are not the same thing. When refineries operate normally, crude can be processed into petrol, diesel, and other fuels. When major facilities are disrupted, less finished fuel reaches markets, creating pressure on prices.

The article says severe disruptions affected refineries in the Gulf region and across Russia. This helped fuel prices rise across the UK, Europe, and the US. The reduced refining capacity made the difference between crude-oil costs and fuel prices soar. BP earned almost $47 for each barrel produced as a result.

The effects reached households and businesses directly. UK diesel rose to 198.79p a litre, while petrol averaged 172.92p. The episode shows that fuel markets depend on functioning refineries as well as crude oil. Continued disruption can keep pump prices high and increase refinery profits, even without record crude prices.

BP’s profits and household costs are connected through energy markets. When oil, gas, or refined-fuel prices rise, energy companies can earn more, while households pay more for transport and heating. The article presents this contrast as BP reported an $8.46bn quarter and families faced rising living costs.

The UK’s average petrol price reached 172.92p a litre, compared with 132.83p in late February. Diesel rose to 198.79p. Campaigners also warned that many people were struggling to afford heating as winter approached. Higher fuel costs can raise transport expenses and add pressure to household budgets.

BP’s profits do not alone determine every energy bill. However, they show how the same market conditions can benefit an oil company while hurting consumers. Campaigners criticised BP for increasing oil and gas production and cutting renewable investment. The cost pressure may intensify if fuel disruption and cold weather continue.

Crude oil is a naturally occurring mixture of hydrocarbons found underground or beneath the seabed. It is not ready to use directly in most cars or aircraft. Refineries process it into different products by separating its components and treating them to meet the needs of engines and other users.

In a refinery, crude is heated so parts with different boiling points can be separated. Further processing changes some components into more useful fuel molecules. The result includes petrol for cars, diesel for cars and trucks, and jet fuel for aircraft. The article describes this broadly as refining crude into fuel products such as diesel and gasoline.

This transformation explains why refinery conditions matter to prices and profits. If refineries are disrupted, less finished fuel is available even when crude remains below earlier price peaks. In the article, strong refined-fuel prices helped BP earn almost $47 on each barrel produced and contributed to its record quarterly result.