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watch now Oil major BP smashed third-quarter expectations on Friday, as volatile energy markets and high refining margins saw profits nearly quadruple year-on-year. The company reported $8.5 billion in underlying replacement cost profit, used as a proxy for net profit. That was above the $6.191 billion forecast by analysts in an LSEG-compiled consensus and up from $2.2 billion a year ago .
Operating cash flow hit $28.55 billion across the first nine months of the year, up from $16.89 billion in 2025, while net debt fell to $13.87 billion from $26.05 billion across the same period. The result primarily reflects better performance in gas and marketing trading, and "significantly higher" realized refining margins, BP said. "These are dynamic times with volatility and disruption to trade flows continuing to define energy markets," BP CEO Meg O'Neill said in a statement.
"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 gap." Demand outlook Rivals Shell and TotalEnergies on Thursday said their refining margins — the amount earned from processing crude oil into products like diesel, jet fuel and gasoline — hit historically high levels . Outages and damage to refineries from global conflicts, from the Russia-Ukraine war to the Middle East, have created tightness in global fuel markets this year, pushing product prices sharply higher relative to crude .
Benchmark crude prices have also been hugely volatile this year as traders reacted swiftly to unpredictable newsflow coming from the U.S. and Israel's war with Iran, and remain nearly double their level a year ago. Stock Chart IconStock chart icon ICE Brent crude price. Analysts have been questioning when and if high energy prices will ultimately drive demand destruction, easing pressures on constrained refineries, as the premium for refined products over crude remains at decade-highs.
BP CEO O'Neill told CNBC's "Squawk Box Europe" on Friday that BP's refining indicator margin for the quarter of $46.7 a barrel was "incredibly strong" and "indicative of demand for the products we produce," boosted by refining reliability of over 96%. "We've been able to adapt and try to adjust our refining runs to meet... the needs for the product that is most in demand," she said. "Now, if we roll forward, we are seeing refining margins start to soften a bit ... third quarter is always a big driving period and a big holiday period.
So, fourth quarter demand typically drops off. That is bringing the refining margins down a bit." "But again, what we control is our ability to run our facilities safely and reliably to try to capture the opportunity that presents itself." BP announced a new strategy last year that sees the energy giant pivot back towards its traditional oil and gas operations and away from renewables. It also announced a consolidation of its leadership structure and debt reduction.
O'Neill told CNBC on Friday that BP was focused on strengthening its balance sheet to give shareholders "confidence that they can be rewarded through the cycle." "So, oil prices today are strong. They will not always be strong. I've got 30 years in the industry, and the prices go up and down.
And at some point, they will fall again. So we need to design a company and a financial frame and a balance sheet that allows us to reward shareholders through the cycle." That includes addressing its financial obligations, including the $5.9 billion it still owes the U.S. government and states for settlements over the Deepwater Horizon oil spill in the Gulf of Mexico in 2010 , which it intends to ringfence extra cash for, she said. "Deepwater Horizon was an incredible tragedy, and it has shaped BP.
We will not forget the 11 men who lost their lives, or the impact that we had on the Gulf Coast and the environment there," she said. "So we have deeply embedded those lessons, but we're in a position now where we want to take care of those financial obligations going forward to ensure we're a more resilient company in future years."
Source: CNBC
