BP Faces Profit Hit Amid Falling Refining Margins

British energy giant BP announced that weak refining margins and oil trading are expected to impact its second-quarter profit, leading to a 3% drop in shares. The company anticipates charges of up to $2 billion due to a review of its Gelsenkirchen refinery in Germany. BP's quarterly results are due on July 30.

British energy giant BP announced on Tuesday that weak refining margins and oil trading are forecasted to affect its second-quarter profit, causing a 3% decline in its share price during morning trading.

The company revealed that its refining margins would endure a $500 million to $700 million hit. Additionally, BP expects to record charges ranging from $1 billion to $2 billion in the second quarter, primarily linked to its review of the Gelsenkirchen refinery in Germany. This announcement follows last week's news from Shell, which disclosed an impairment charge of up to $2 billion regarding the sale of its Singapore refinery and the pause of construction at one of Europe's largest biofuel plants in the Netherlands.

BP's earnings report follows U.S. oil major Exxon Mobil's indication on Monday that lower refining margins and natural gas prices would negatively impact its second-quarter profit. BP, set to release its quarterly results on July 30, stated that its upstream production in the second quarter is expected to remain broadly flat compared with the previous quarter.

Oil and gas production achieved 2.38 million barrels of oil equivalent per day (boepd) in the first quarter, propelled by field start-ups in Azerbaijan and the United States. According to LSEG data, investors anticipate BP's second-quarter underlying replacement cost profit, which is the company's net income definition, to reach $3.13 billion.