Global Energy Titbits
BP Quarterly Profit Jumps To 14-Year High
BP on Tuesday increased its quarterly dividend by 10% and extended share buybacks after high oil and gas prices in the second quarter resulted in the supermajor’s highest quarterly earnings in 14 years, which easily beat analyst expectations.
BP reported yesterday an underlying replacement cost profit—its preferred metric for net profit—of $8.45 billion for the second quarter, up from $6.2 billion for the previous quarter and well above analyst estimates of $6.8 billion.
The jump in Q2 earnings—the highest quarterly profit since 2008—was “driven by strong realized refining margins, continuing exceptional oil trading performance and higher liquids realizations,” the company said in a statement.
Gas marketing and trading was down from “the exceptional result in the first quarter,” which partly offset the exceptional oil trading performance in Q2. The ongoing outage at Freeport LNG impacted LNG trading and led to “a significant reduction in the number of cargoes expected to be received,” BP said.
Petrol prices are set to fall across the UAE in August despite sustained high global oil prices. Reports say motorists have faced significant rises at the pumps in recent months, including a 16% increase in April, a 13% rise in June and an 11% jump in July.
The breakdown price per litre for August is as follows: Super 98: Dh4.03 — falling from Dh4.63 in July (a fall of 13%): Special 95: Dh3.92 — decreasing from Dh4.52 in July (a fall of 13%): Diesel: Dh4.14 — reducing from Dh4.76 in July (a fall of 13%): E-plus 91: Dh3.84 — falling from Dh4.44 in July (a fall of 13.5%).
The prices announced by the UAE Fuel Price Committee in July were the highest so far since they were liberalised in 2015, to allow them to move in line with the market. In 2020, prices were frozen by the Fuel Price Committee after the onset of the coronavirus pandemic. The controls were removed in March 2021 to reflect the movement of the market.
U.S. Gasoline Prices Continue To Slide Toward $4
The national average for a gallon of gasoline in the United States fell again yesterday to $4.212, according to an AAA data. U.S. gasoline prices are down 14.3 cents from last week, and 63 cents from a month ago when gasoline was trading at $4.842.
A year ago, gasoline prices were just $3.173 per gallon – meaning that while gasoline prices have come down substantially in recent weeks, the average is still $1.039 more than what it was a year ago.
According to GasBuddy’s head of petroleum analysis, Patrick De Haan, gasoline prices have eased for the seventh straight week, falling 15.9 cents a week ago to an average of $4.17 per gallon on Monday.
“We continue to see average gas prices falling in every state, with the national average down for the seventh straight week. Even better, nearly 20 states have also seen their average decline to $3.99 or less, with over 70,000 stations now at that level or below,” De Haan said in a note on Monday.
Why The U.S. Is Desperate For A Russian Oil Price Cap
The United States is looking to convince major oil importers, including Russia’s key buyers these days, China and India, to endorse a plan to cap the price of Russian oil they are buying.
The U.S. and other major developed Western economies are wary of letting international crude oil prices spike later this year when the EU ban on providing insurance and financing for seaborne transportation of Russian oil takes effect in December.
Russia will be effectively shut out of more than 90% of the global oil shipment insurance market as most of the ports do not allow tankers to dock unless they have full insurance coverage, including insurance from the UK-based International Group of P&I Clubs, which handles 95% of the global tanker insurance market and consists mostly of UK, U.S., and European insurers.
This would severely cripple the flow of Russian oil globally, potentially leading to record-high oil prices, which the Biden Administration simply cannot afford to have right now, especially after boasting just a few days ago that “Gas prices are declining at one of the fastest rates we have seen in over a decade – we’re not letting up on our work to lower costs even further.”
In addition, soaring fuel prices would further stoke already four-decade high inflation and further complicate the Fed’s efforts to tame that inflation with