BP (BP, Financial) has joined other major refineries in cautioning about a decline in third-quarter earnings due to slowing fuel demand. The British oil and gas company anticipates steady production levels across its upstream operations, including oil, natural gas, and low-carbon energy. However, it expects a negative impact of $100 million to $300 million on oil production and operations due to price lags in the UAE and Gulf of Mexico.
Additionally, BP projects exploration business write-offs to adversely affect earnings by $200 million to $300 million. The finished products business is expected to face challenges from stagnant fuel margins and a decline of $400 million to $600 million in refining profits.
Lower profit margins and the deferral of approximately $1 billion in divestment proceeds to the next quarter will contribute to higher net debt in Q3. Similarly, Shell (SHEL) and ExxonMobil (XOM) have also issued warnings of reduced profitability due to weaker refined-product trading and declining oil prices.
BP shares have fallen about 7% this year, while Shell and ExxonMobil have seen gains of 4.4% and 20%, respectively. Over the past six months, nearby WTI crude futures have dropped nearly 12%, with Brent crude futures down 13%.
