BP outperformed ExxonMobil due to strong trading performance and minimal production disruption.

U.S. majors suffered production disruptions, while BP’s trading performance stood out. This round of geopolitical conflict has had vastly divergent impacts on companies’ production. According to Raymond James data, Exxon’s output in the Gulf region affected by the war is roughly five times that of Chevron. Approximately one-fifth of Exxon’s global production is trapped inside the Strait of Hormuz. Chevron likewise faces a first-quarter production loss of up to 6%, but a substantial portion stems from a fire incident at the Tengiz mega-field in Kazakhstan—unrelated to the war. At the trading strategy level, European and U.S. oil majors also differ markedly. European firms maintain trading divisions significantly larger than their U.S. peers, granting them stronger arbitrage capabilities during periods of sharp price volatility. BP disclosed this month that its trading performance is expected to be “exceptionally strong”; Shell and TotalEnergies have likewise signaled earnings exceeding expectations. In contrast, Exxon and Chevron have traditionally adopted conservative stances toward trading risk, typically hedging price fluctuations via derivatives only after cargo shipment. This strategy will cause both U.S. firms to incur nearly $7 billion in mark-to-market losses collectively in Q1. Undervaluation coupled with debt improvement expectations BP’s stock outperformance versus peers is also attributable to its low valuation—a factor often associated with greater share-price elasticity. BP suspended its share buyback program earlier this year; analysts expect the company to deploy this cash flow more aggressively toward debt reduction, thereby enhancing financial flexibility for future upstream exploration and development. According to TD Cowen analyst Jason Gabelman, Chevron may raise its quarterly buyback size by 25% to $3.8 billion this quarter and plans further increases throughout the year. Exxon is expected to maintain its quarterly buyback at $5 billion—the highest among the top five majors. Although Exxon has the largest exposure to the Middle East, its growth in the Permian Basin and Guyana, along with its petrochemicals and helium businesses, provides a buffer. New CEO’s return to fossil-fuel strategy sparks market turnaround expectations O’Neill spent over two decades at Exxon before taking the helm at BP; since his appointment, BP’s strategic pivot back toward fossil fuels has accelerated rapidly. In March, BP secured approval from the Trump administration for its first new Gulf of Mexico project since the 2010 Deepwater Horizon disaster; concurrently, the company acquired interests in offshore Namibia blocks—targeting one of the world’s premier exploration hotspots.

What is BP’s current operational condition?

• BP has been rated a “Strong Buy,” driven by robust earnings growth, operating leverage, and accelerated deleveraging amid elevated oil and refining margins. • Second-quarter results show revenue up 29.2%, net profit surging 193%, stable operating expenses, and abundant cash flow supporting rapid debt reduction. • Refining margins and crack spreads are at unprecedented highs, underpinning BP’s profitability, while strict cost control and high cash-margin efficiency ensure resilience even amid falling oil prices. • BP completed its net debt reduction target one year ahead of schedule and remains well-positioned to pursue potential share repurchases and continue dividend payouts—even amid price declines. Investment rationale Covering energy markets over the past nine months or so has truly been a delight. Given the extraordinary changes we’ve witnessed, this period has indeed been exceptional. At the start of the year, concerns centered on U.S. intervention in Venezuela leading to oil supply oversupply. Yet those worries quickly evaporated—and just months later, the situation flipped entirely: oil prices surged above $120 per barrel, and supply shortages emerged. Throughout all this, major energy companies performed exceptionally well—but in my view, BP stood out most impressively. Compared to the same period last year, BP’s first-half revenue rose 29.2%, while net profit soared an astonishing 193%. The key driver behind this massive profit surge was relatively stable operating expenses—highlighting the enormous upside potential embedded in energy stocks when market conditions are so favorable. Distribution and administrative expenses remain largely unaffected by oil and gas price fluctuations. While BP does periodically procure commodities to supplement its own production capacity—naturally increasing procurement volumes—this increase is far insufficient to dampen its dramatic profit growth. Currently, the focal point lies not merely on oil prices, but on refining margins. BP possesses significant internal leverage opportunities—and my genuine view of the global refining market is that supply deficits will persist. This implies the current high-profit environment will endure. For BP, this means continued deleveraging—and ultimately, I believe, a resumption of share repurchases. Given its profitability, the scale of such buybacks would likely be substantial. Thus, I won’t begin with a simple “Buy” rating—I believe a more optimistic assessment is warranted: in my view, BP is a “Strong Buy.” What has recently happened at BP? However, in February, BP’s stock plunged sharply after the company halted its share buyback program to prioritize reducing balance-sheet debt. Yet in this regard, the company has excelled. Net debt currently stands at $22.2 billion, down from $26.0 billion in Q2 2025. Part of this decline reflects increased cash balances. Actual financed debt has fallen from $60.3 billion in Q2 2025 to $58.3 billion today. Financing costs totaled $2.35 billion in H1 2026 and $4.7 billion for the full year. Considering financed debt, this implies BP—despite its massive scale and market stature—carries a financing cost of just 8%. Its long-term credit rating is A, so I believe investors need not worry about this.

BP Debt Shrinks With Boost From Oil and Gas Trading, Refining

Oct 12, 2026

BP Plc reached its 2027 net debt target early, boosted by soaring oil prices and strong trading and refining performance amid geopolitical tensions. Significant impairment charges were reported in its energy transition businesses ahead of full quarterly results.

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2026-07-13

BP Flags $1 Billion Writedown From Low Carbon Business

2026-10-12

BP Debt Shrinks With Boost From Oil and Gas Trading, Refining

BP Debt Shrinks With Boost From Oil and Gas Trading, Refining

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