BP records mammoth loss as pandemic rattles oil industry

The bloodbath in the energy markets created by the Covid-19 pandemic has left a multi-billion dollar hole in BP’s finances, the oil giant’s quarterly and annual reports have revealed.

BP lost $5.7 billion last year, down from a profit of $10 billion in the pre-pandemic 2019, according to data provided by the company on Tuesday. This is worse than analysts’ predictions, which projected BP’s full-year net loss to stand at $4.8 billion. 

Despite the oil market’s partial recovery in the second half of the year, BP’s results for the last quarter also fell short of analysts’ expectations. In the last three months of 2020, BP’s net income reached $115 million compared with $2.57 billion a year earlier. While the figure slightly improved compared to the previous quarter, it was still behind market expectations of between $285 million and $440 million.

“These results reflect a truly tough quarter,” Chief Financial Officer Murray Auchincloss said. BP said the losses were driven by lower oil and gas prices, significant exploration write-offs, refining margins and depressed demand. While coronavirus restrictions can still affect the oil industry’s performance, the company nevertheless expects “much better days ahead for all of us in 2021” due to recovery in oil demand. 

However, BP’s optimism for this year is not shared by the International Energy Agency (IEA) and the alliance of global oil producers, the Organization of the Petroleum Exporting Countries (OPEC). Last month, the IEA cut its 2021 outlook for global oil demand by 0.3 million barrels, while OPEC and allied producers are still withholding millions of barrels of crude. 

BP's shares were down more than three percent in London and over four percent in pre-market trading in the US after the company revealed its financial results. At the height of the Covid-19 outbreak, its share price almost halved but has managed to rebound since then. 

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