BP's first-quarter profit more than doubled year-on-year to $3.2 billion - its highest in two-and-a-half years - the British oil major reported on Tuesday, beating expectations after the Iran war helped boost oil trading results.
The spike in oil prices triggered by war has helped European majors reap billions of dollars from the energy supply crunch.
BP had already flagged an exceptionally strong quarter for its trading desk. Its customers and products business, which includes the trading business, recorded a profit of $3.2 billion before interest and tax, beating an average analyst estimate of $2.5 billion.
Results at BP's gas and low carbon and oil production and operations units came in slightly below expectations.
The company's underlying replacement cost profit, its version of net income, of $3.2 billion compared with expectations of $2.67 billion in a company-provided poll of analysts and $1.38 billion a year ago.
BP said fuel margins are expected to "remain sensitive" to the cost of supply and conditions in the Middle East, while it expects 2026 reported upstream production to be lower due to the effects of the conflict.
"We are heading in the right direction, strengthening the balance sheet and continuing to accelerate delivery," said CEO Meg O'Neill.
Tuesday's results were her first at the helm of BP after starting in the role in April and becoming its fifth chief executive since 2020.
BP said it planned to reduce its hybrid bonds by around $4.3 billion to around $9 billion. Hybrid bonds blend debt and equity traits. While they pay fixed income like bonds, issuers can skip payments, making them riskier and costlier. These often do not count as debt, helping preserve credit ratings.
At the same time, BP's net debt is expected to creep up due to so-called working capital movements - a liquidity measure of current assets minus liabilities - that amounted to $6 billion in the quarter, boosted by the impacts of the Iran war.
Net debt at the end of the first quarter was $25.3 billion from just over $22 billion in the previous quarter.
(Reuters - Reporting by Stephanie Kelly and Shadia Nasralla; Editing by Kirsten Donovan and Joe Bavier)