BP profits fall after lower oil and hurricane prices

BP’s profits have fallen sharply as global oil prices tumble amid gloomy forecasts for the global economy.

The oil major reported underlying profits of $2.3bn (£1.76bn) for the last three months on Tuesday morning, compared with $3.8bn in the same months last year.

The decline comes just weeks after BP announced that its chief executive, Bob Dudley, would step down, after almost a decade at the helm, to make way for a new chief executive with a plan to help tackle the climate crisis.

Dudley will end his four-decade career at BP early next year and be replaced in February by Bernard Looney, BP’s head of exploration and production. By the summer, Ireland-born Looney plans to set out BP’s plans to prepare the business for a low-carbon future.

A spokesman for the company confirmed on Tuesday that Looney would directly address the “biggest challenge” to BP’s future by the middle of next year. The company is also under pressure from investors to grow its cash flows, reduce its debt and keep paying out rising dividends.

BP blamed its falling profits on weaker global oil prices, a string of one-off financial hits due to the falling value of its assets, and the impact of Hurricane Barry.

The tropical cyclone dealt a “significant” blow to BP’s oil production in the Gulf of Mexico after shutting down production by two weeks over the summer. Meanwhile, the market price for oil slumped to an average of $62 a barrel in the last quarter, from more than $75 a barrel a year ago. The market price on Tuesday was below $61 a barrel.

The oil price slide comes a year after the oil company agreed to buy a $10.5bn stake in the US shale boom from BHP Billiton, in a deal seen as a show of confidence that global oil prices would remain at about $70 a barrel.

BP’s biggest deal in 20 years triggered a $10bn divestment drive that has already led BP to write down $3.3bn on oilfields it has sold for less than it had initially valued them.

As a result, BP’s net debt has climbed to $46.5bn, compared with $38.5bn a year ago.

There has been growing public opposition in recent months to the fossil fuel company’s contribution to the climate crisis. Earlier this month, the Royal Shakespeare Company ended its sponsorship deal and protesters targeted the National Portrait Gallery over BP’s ongoing support.

An investigation by the Guardian revealed that 20 oil and gas companies – including BP, Shell, Chevron, ExxonMobil and Total – could be directly linked to a third of greenhouse gas emissions since 1965.

The companies are planning to keep increasing their oil production, despite global efforts to avoid a runaway climate crisis by limiting carbon emissions, in large part from US shale reserves.

Shares in BP were down 4.6% at 488p in late afternoon trading.