BP's first-quarter results were better than expected. Its underlying replacement-cost profit, a measure oil companies use to strip out some swings in the value of inventories, rose to $3.2bn, more than double the previous quarter's $1.54bn and ahead of analysts' expectations of about $2.6bn-2.7bn. The main reason was oil-market volatility. BP said oil trading was “exceptional”, helped by sharp price moves linked to conflict in the Middle East.
Oil majors such as BP make money in several ways. They produce oil and gas, refine crude into fuel, sell energy products and trade commodities. Trading can do especially well when prices move quickly, because skilled traders can profit from gaps between regions, contracts and delivery dates. That seems to have happened this quarter. It is profitable, but it is not always repeatable.
The share price tells the same story. BP's London-listed shares were up about 32% in 2026 by April 27, making the stock one of the stronger performers among the big European oil names this year. Investors are rewarding higher cash generation, but also a simpler message: BP is leaning harder into oil and gas after years in which its low-carbon strategy struggled to convince the market.
The old BP returns
The company grew from Middle Eastern oil, became one of Britain's corporate giants, and later tried to present itself as an energy group rather than merely an oil company. That ambition had logic: governments wanted lower emissions, investors worried about stranded assets and younger customers wanted cleaner energy.
But the transition proved harder than the slogan. Renewables often offer lower returns than oil and gas. BP's shares lagged peers for years. Activist investors and other shareholders pushed for better returns. The arrival of Meg O'Neill as chief executive marks another reset: less grand language about transformation, more focus on costs, debt, production and returns.
The risk is that BP is becoming more dependent on the old cycle just as it looks most rewarding. High oil prices flatter cash flow. Low oil prices expose weak balance sheets. The company's net debt rose to about $25.3bn, up from roughly $22.2bn at the end of 2025, partly because volatile markets can tie up working capital. Debt reduces flexibility: money used to service borrowings cannot be spent on dividends, buybacks or new projects.
Cheap, but not without a reason
On valuation, BP still looks inexpensive next to many large companies. MarketScreener puts BP on a 2026 estimated price/earnings ratio of about 9 times, an EV/EBITDA ratio of 3.2 times and a dividend yield of about 4.4%. BP's sector table shows average peer multiples of roughly 11.6 times earnings and 6.4 times EV/EBITDA, so BP trades at a discount.
That discount is not irrational, since BP has a more complicated recent record than some rivals, and its profits remain tied to oil, gas and refining margins.
The quarter therefore deserves two readings. The bullish one is simple: BP beat forecasts, benefited from a strong trading arm, offers a healthy yield and is finally saying what investors wanted to hear about discipline. The cautious one is that the best part of the result came from conditions BP does not control: war, supply shocks and price volatility.
The next test is whether the company can cut debt, keep capital spending under control and produce decent returns when oil markets are quieter.
