BP joins Exxon in saying weak refining margins will hit second-quarter profits

By Louis Goss

BP said it's going take an impairment of up to $2 billion

BP on Tuesday said it expects weak margins in its refining business will have hit its second quarter profits by up to $700 million after Exxon Mobil on Monday said a similar slump in refining margins could see it take a $1.5 billion hit.

The London headquartered oil major said it expects "significantly lower realized refining margins" will see it take a $500 million to $700 million hit to its profits in the second quarter of 2024 after strong refining margins previously buoyed its profits in the first quarter of the year.

BP (UK:BP) (BP) shares, listed on the London Stock Exchange, fell 2% on Tuesday having gained 1% over the previous 12 months.

BP said the weaker margins are from selling middle distillates -- such jet fuel and diesel -- and narrower differences between the benchmark oil price and the price of North American heavy crude oil - that is used to make shipping fuel.

Heavy supplies of renewable diesel onto the U.S. market have hit diesel prices and caused refining margins to slump, according to ratings agency Fitch.

Exxon (XOM) on Monday said weak refining margins could see it take a $1.1 billion to $1.5 billion hit to its second-quarter profits, on top of a $300 million to $700 million hit from lower natural gas prices, as the result of a diesel market glut.

BP also said it's going take an impairment of up to $2 billion, including from its ongoing review of its Gelsenkirchen refinery in Germany that was announced in March. BP at the time had said costs at the site were too high, amid a diminished interest in domestic oil products demand.

-Louis Goss

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07-09-24 0456ET

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