BP Warns of Lower Q2 Profits Amid Weak Refining Margins

British energy major BP warned of lower second-quarter profits due to weak refining margins and oil trading, forecasting a $500-$700 million hit. Expected to incur charges of $1-2 billion tied to its German refinery review, BP's upstream production remains stable. Rival Shell also expects similar impairments.

British energy giant BP announced on Tuesday that weak refining margins and oil trading are anticipated to dent its second-quarter profits, resulting in a 3% drop in its shares during morning trading.

The company projected a $500 million to $700 million hit to its refining margins and expects to record charges amounting to $1 billion to $2 billion in the second quarter, primarily related to a review of its Gelsenkirchen refinery in Germany. Similar to BP, rival company Shell had previously announced it would take an impairment charge of up to $2 billion linked to the sale of its Singapore refinery and halting construction at a European biofuel plant.

BP's earnings forecast follows U.S. oil giant Exxon Mobil's announcement on Monday that lower refining margins and natural gas prices would impact its second-quarter profits. As BP prepares to release its quarterly results on July 30, the company noted that its upstream production for the second quarter will remain broadly in line with that of the previous three months.

(With inputs from agencies.)