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Oil giant BP swings to huge profit as soaring commodity prices drive up earnings

The BP company logo is seen outside a petrol station on September 23, 2021 in London, England.

Leon Neal | Getty Images News | Getty Images

Oil and gas giant BP on Tuesday reported a massive upswing in full-year net profit, supported by soaring commodity prices.

The British energy major posted full-year underlying replacement cost profit, used as a proxy for net profit, of $12.8 billion. That compared with a net loss of $5.7 billion the previous year.

Analysts polled by Refinitiv had expected full-year net profit of $12.5 billion.

BP also posted fourth-quarter net profit of $4.1 billion, beating analyst expectations of $3.9 billion.

Shares of BP are up over 23% year-to-date.

A surge in global gas markets through the final months of 2021, coupled with an oil price rally to seven-year highs, has seen the world’s largest fossil fuel giants rake in bumper revenues.

It comes at a time when millions of U.K. households are facing a record-breaking increase in their energy bills amid a cost of living crisis.

Britain’s energy regulator Ofgem on Thursday announced a whopping 54% increase to its price cap from April. It means U.K. households could see their energy bills rise by around £700 ($946) a year, with an estimated 22 million households forecast to see their energy costs increase.

It is against this backdrop that anti-poverty campaigners have described the profits of U.K. oil and gas producers as “obscene“, particularly since a hike in energy bills could plunge an additional 1.1 million homes into fuel poverty.

Last week, British oil major Shell reported bumper annual earnings and announced it was “stepping up” its distributions to shareholders.

Shell CEO Ben van Beurden described 2021 as a “momentous” year. As a result, the company outlined plans to buy back $8.5 billion in shares in the first half of the year and said it expects to increase its dividend by 4% to $0.25 per share in the first quarter.

Stateside, oil giants Chevron and Exxon Mobil reported net profits of $15.6 billion and $23 billion, respectively, a huge upswing compared to the year prior when the coronavirus pandemic hit oil demand.

U.K. lawmakers from across the political spectrum have renewed calls on Prime Minister Boris Johnson’s government to impose a windfall tax on North Sea producers to help fund a national package of support for households.

Britain’s Finance Minister Rishi Sunak has rejected this move, however, saying such a policy would ultimately deter investment.

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2022-02-08 01:05:35

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