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% 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 340 million-dollar (£251 million) 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 25 and 27 billion US dollars (£18.5 billion to £20 billion), up from 22.2 billion dollars (£16.4 billion) in the fourth quarter.
The firm will report first quarter figures on April 28.
BP shares fell around 1% in Tuesday morning trading as oil prices edged below 100 US dollars a barrel on that latest hopes of a revival in US-Iran negotiations.
Susannah Streeter, chief investment strategist at Wealth Club, said: “Crude prices have dipped back a little as hopes rise for fresh talks to end the Iran conflict, but the squeeze on energy supplies is likely to remain a disruptive force, and markets are set to 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.”
She added that net debt at BP is rising “because more cash is being tied up in day-to-day operations”.
“As oil prices rise, BP is likely to need more money to hold the same barrels and to keep its trading activity running, which pushes up borrowing in the short term,” she said.
Fellow FTSE 100 oil major Shell last week also said the recent spike in prices was boosting trading in its chemical and products business, which includes oil trading.
But Shell cut its guidance for first quarter integrated gas production after volumes from Qatar were particularly impacted during recent attacks.
Last month, Shell’s PearlGTL site in Qatar stopped production after being hit during attacks while LNG facilities in the country partly owned by Shell have also been impacted.
BP’s upcoming first quarter results will be the first under new chief executive Meg O’Neill, who took over on April 1.
She replaced Murray Auchincloss, who was ousted last year as part of a leadership overhaul by new chairman Albert Manifold.
