LONDON (Realist English). British BP, one of the world’s largest oil supermajors, has reported a significant reduction in net debt in the second quarter of 2026 — driven by the war in Iran and the subsequent surge in oil prices to multi-year highs.
The company’s net debt at the end of June is estimated at $22–23 billion, down $2.3–3.3 billion from the end of March ($25.3 billion). Analysts note that the reduction came *despite* large one-off payments: the redemption of perpetual hybrid bonds worth $2.9 billion and settlements of obligations in the Gulf of Mexico totaling $1.1 billion.
Prices and Profits: How the War Filled BP’s Coffers
Rising oil prices were the main driver of BP’s financial success. In the second quarter, the average Brent price was around $97 per barrel — compared to roughly $78 in the first quarter and $67 a year earlier.
The surge in oil quotes brought the oil giant an additional $1.8–2.1 billion in revenue from production and refining. Another $500–700 million came from the gas segment. Refining also showed impressive growth: refining margins rose from $16.9 to $29.6 per barrel.
As The Guardian notes, oil prices rose more than 3% on July 13 after the US reimposed its naval blockade and struck Iran. On the morning of July 14, Brent was trading at $85.75 a barrel.
Trading and Logistics: BP Profited from Chaos
BP’s trading segment proved particularly successful. As new CEO Meg O’Neill stated, BP’s trading and shipping teams, together with the refining division, organized the delivery of 50 million liters of diesel from the Cherry Point refinery in Washington state to Sydney to compensate for shortages in Australia.
The Spanish Castellon refinery increased jet fuel production by 30% ahead of the European summer season.
According to Reuters, BP’s total net debt, hybrid bonds, and Gulf of Mexico obligations fell by $6.3–7.3 billion compared to the previous quarter.
The Downside: Production Falls
Despite all the financial success, BP faced a drop in production. Expected output in the second quarter is 2.17–2.22 million barrels of oil equivalent per day, down from 2.34 million in the first quarter. Reasons include seasonal maintenance and the fallout from the Middle East crisis.
BP also expects impairments of $1 billion, mainly related to “transition” businesses in the gas and low-carbon segments. Another $500 million will come from exploration write-offs, largely due to the sale of its stake in the Bay du Nord project off the coast of Canada.
Ambitious Targets: Debt Below $18 Billion by End of 2027
BP confirmed its intention to reduce net debt to $14–18 billion by the end of 2027. As Dan Coatsworth, head of markets at AJ Bell, noted: “One of the key causes for investor concern is BP’s balance sheet. In this context, it’s no surprise that the significant debt reduction has been warmly received.”
New CEO Meg O’Neill, who took office in April 2026 after a leadership change, set three priorities for the company: operational excellence, increased accountability, and strict discipline in spending, cash flow, and capital.
“We need to be selective in our investment decisions. We need to make fewer, but better, choices and be accountable for them,” she said.
Market Reaction
Investors responded positively to the news. BP shares rose 2.9% on July 14. Citi raised its second-quarter earnings per share forecast by 18%. The company’s stock is up more than 32% since the start of the year.
BP will report its full second-quarter results on August 4. For now, the war in Iran and the blockade of the Strait of Hormuz continue to support high oil prices, but uncertainty remains high.
As UK Investor Magazine notes: “The persistent volatility of oil prices makes forecasting BP’s near-term profit outlook and that of its peers challenging.”
