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BP reports sharp profit decline as oil prices tumble
BP announced a 16% drop in annual profits for 2025, falling to $7.5 billion from $8.9 billion the previous year, as crude oil prices declined by approximately 20%. The company also suspended its share buyback program and increased its cost-cutting targets to strengthen its financial position.
Strategic shift and leadership transition
Under pressure from shareholders for underperformance, BP has pivoted away from renewable energy investments to refocus on oil and gas operations. Meg O'Neill, set to become the first female CEO of a major global oil company, will take the helm in April. O'Neill, formerly the head of Australian oil and gas firm Woodside Energy, is expected to continue BP's strategic realignment.
"We look forward to Meg's arrival as we accelerate our progress to build a simpler, stronger, and more valuable BP for the future," said Carol Howle, BP's interim chief executive.
Carol Howle, BP Interim CEO
Cost-cutting and debt reduction efforts
BP aims to achieve cost savings of $5.5 billion to $6.5 billion by the end of 2027, up from its previous target of $5 billion. This follows the sale of a 65% stake in its Castrol business. The company is also working to reduce its debt, which currently stands at around $22 billion.
Derren Nathan, head of equity research at Hargreaves Lansdown, commented on BP's actions: "Management is taking decisive steps to fix the balance sheet, scrapping the buyback, doubling down on non-core disposals, and increasing structural cost-saving targets."
Profit slump and industry trends
BP's profits in the last quarter of 2025 fell by 30% to $1.54 billion, coinciding with Brent crude oil prices dipping below $60 a barrel for the first time in over four years. This marks the third consecutive year of declining annual profits for BP, following a peak of $27.7 billion in 2022 driven by soaring oil prices after Russia's invasion of Ukraine.
Shell, a rival oil giant, also reported a 22% drop in underlying earnings for 2025, totaling $18.53 billion.
Challenges and shareholder concerns
O'Neill inherits a challenging environment at BP. Her predecessor, Murray Auchincloss, stepped down after less than two years, following Bernard Looney's dismissal in 2023 due to "serious misconduct" related to undisclosed relationships with colleagues.
Cornelia Meyer, CEO of Meyer Resources and a former BP executive, expressed confidence in O'Neill's ability to revive BP's fortunes, stating: "If anybody can, she probably can. She's an oil woman, not a renewables woman, and she will instill discipline."
A group of pension funds has filed a resolution for BP's upcoming annual general meeting in April, questioning whether increased spending on upstream oil and gas operations will yield the best returns for shareholders.
"BP doesn't appear to have shareholder interests at heart by halting share buybacks while continuing to invest in oil and gas," said Nick Mazan from the shareholder advocacy group ACCR. "Our analysis shows that the upstream business has been the source of 75% of disposal losses and impairments since 2020."
Nick Mazan, ACCR
