Profit Decline And Oil Price Impact
BP reported a fall in annual profit and said it would increase its cost-cutting target after a drop in crude prices weighed on results. The company said profit for 2025 was $7.5 billion (£5.5 billion), down from $8.9 billion a year earlier, after oil prices fell by about 20%. It also said it was suspending its share buyback program and reducing spending as it works to strengthen its finances.
Profit in the final three months of the year fell 30% to $1.54 billion, a period in which the price of Brent crude dropped below $60 a barrel for the first time in more than four years. BP’s annual profit has now declined for three consecutive years after peaking at $27.7 billion in 2022, when prices rose following Russia’s invasion of Ukraine.
Strategy Shift And Leadership Change
BP has moved away from heavier investment in renewable energy projects and refocused on oil and gas operations. The company said this shift would continue under its new chief executive, Meg O’Neill, who takes over in April after leading Australia’s Woodside Energy. She will become the first woman to run a major global oil company.
Carol Howle, BP’s interim chief executive, said the company is preparing for O’Neill’s arrival as it seeks to build what she described as a simpler and stronger BP. The company has faced pressure from shareholders after lagging rivals in recent years. A year ago, BP said it would reduce planned spending on renewables and direct billions more each year toward its core oil and gas business.
Debt, Disposals, And Cost Targets
BP said it is working to reduce debt that stands at about $22 billion. With its latest results, the company raised its cost-saving target to between $5.5 billion and $6.5 billion by the end of 2027, up from a previous goal of up to $5 billion. The change follows its decision to sell a 65% stake in its Castrol business.
Derren Nathan, head of equity research at Hargreaves Lansdown, said management is taking steps that include ending the buyback, increasing non-core asset sales, and lifting structural cost-saving goals to improve the balance sheet.
EV Plans And Industry Comparisons
BP has also recorded a $19.5 billion charge linked to scaling back earlier electric vehicle plans, which contributed to a fourth-quarter net loss of $11.1 billion. The company said weaker demand and regulatory changes reduced the case for focusing on large electric vehicles, and it is now investing more in hybrids, gas-powered vehicles, and smaller electric models.
General Motors made a similar move in October, saying it would take a $1.6 billion charge as it reduced its own electric vehicle ambitions amid softer demand. BP also said a fire at an aluminum supplier affected profits last year.
Governance History And Investor Questions
O’Neill will take over after a period of leadership change. Her predecessor, Murray Auchincloss, stepped down after less than two years in the role. He had replaced Bernard Looney, who was dismissed in 2023 after BP said he committed serious misconduct by failing to disclose relationships with colleagues.
Cornelia Meyer, chief executive of Meyer Resources and a former BP executive, told the BBC that O’Neill has a strong track record and said she expects her to bring discipline to the company’s operations. She said O’Neill’s background is in oil and gas rather than renewables.
BP is also facing questions from some shareholders about its direction. A group of pension funds has filed a resolution for the company’s annual meeting in April that asks whether more spending on upstream operations, meaning oil and gas exploration and extraction, will deliver the best returns. Nick Mazan of ACCR, the group that submitted the proposal, said that by halting the buyback and continuing to invest in oil and gas, BP does not appear to be prioritizing shareholder interests. He added that ACCR’s analysis shows upstream operations have accounted for 75% of disposal losses and impairments since 2020.
Peer Results And Market Context
Rival Shell also reported lower profit in its latest results. The company said underlying earnings for 2025 were $18.53 billion, a fall of 22% from the previous year. BP’s update places its performance in a wider context of weaker prices and tighter capital decisions across the sector.
Featured image credits: Picasa via Wikimedia Commons
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