BP forecasts mixed 2Q25 results as Gulf oil lag, gas prices, and impairments weigh on outlook
BP flags higher 2Q25 upstream output but warns of $1.5B impairments and weak oil realizations. Find out what’s driving investor sentiment today.
BP p.l.c. (LSE: BP.) released its trading update for the second quarter of 2025 on July 11, outlining expectations of higher upstream production but warning of weaker realizations, flat gas marketing outcomes, and up to $1.5 billion in post-tax impairment charges. The British energy major is set to publish final 2Q25 financial results on August 5.
How are BP’s upstream and refining segments performing amid oil price weakness and turnaround activity?
BP anticipates a sequential uptick in upstream production volumes in 2Q25, driven primarily by increased output from its U.S.-based bpx energy assets. Oil production and operations are expected to deliver stronger volumes, while the gas and low-carbon segment is forecast to record only a slight increase. However, this operational growth may not translate directly into stronger earnings due to weaker realizations.
In particular, the oil production and operations segment is projected to suffer a negative impact ranging from $600 million to $800 million due to pricing lags in the Gulf of America and the United Arab Emirates. Similarly, BP expects gas realizations to drag performance by $100 million to $300 million, citing fluctuations in non-Henry Hub gas benchmarks.

Meanwhile, in its customers and products segment, BP pointed to seasonally stronger fuels demand and refining margins as a partial offset. Realized refining margins are expected to contribute positively in the range of $300 million to $500 million, aided by robust oil trading results. However, significantly higher planned refinery turnaround activity during the quarter—especially at its U.S. facilities—could weigh on net margins, as previously guided in its 1Q25 update.
Why is BP guiding for up to $1.5 billion in impairments and how are institutional investors responding to this update?
One of the more notable disclosures in BP’s trading update is the expectation of $500 million to $1.5 billion in post-tax adjusting items tied to asset impairments. These charges will span multiple business segments but will be excluded from underlying replacement cost profit. While the company did not specify which assets are being written down, such impairments typically stem from updated project economics or divestment-linked adjustments.
Institutional sentiment appears mixed following the update. While investors welcomed the sequential production growth and margin strength in downstream trading and refining, concerns remain about upstream price realization weakness and impairment charges. Analysts flagged that the magnitude of impairments could exceed original full-year guidance, especially given Brent’s decline from $75.73 per barrel in Q1 to $67.88 in Q2—a drop of over 10%.
Net debt, however, is expected to decrease slightly quarter over quarter, a signal that BP’s capital discipline remains intact despite macroeconomic headwinds. This trend may offer some reassurance to long-term institutional holders focused on balance sheet stability.
How are macro energy trends, from Brent and Henry Hub prices to refining margins, affecting BP’s quarterly economics?
BP’s second quarter performance is being shaped by a materially softer crude oil pricing environment. Brent crude averaged $67.88 per barrel during 2Q25, down from $75.73 in the prior quarter. In parallel, the Henry Hub gas index also fell, averaging $3.44 per MMBtu versus $3.65 in 1Q25. These price movements have directly impacted realization values in both upstream oil and gas segments.
On the refining front, BP’s internal refining marker margin (RMM) averaged $21.1 per barrel in 2Q25—substantially higher than the $15.2 per barrel recorded in 1Q25. This strength is attributed to improved product crack spreads and the ongoing recovery in global travel and industrial fuel demand. The company also cited a favorable oil trading environment, which typically supports profitability in the absence of major dislocations or losses.
However, the WTI–WCS spread—a key benchmark for North American heavy crude margins—narrowed from $13.03 per barrel in Q1 to $10.01 in Q2, possibly pressuring margins in some U.S.-based assets.
What were BP’s key operating trends in customers, products, and corporate costs during the quarter?
In the customer-facing business, BP saw a seasonal uplift in fuel volumes, aided by demand strength in the Northern Hemisphere summer. The company also benefited from higher margins across retail and wholesale channels, particularly in the United States, where its bioenergy operations and TravelCenters of America footprint are now fully integrated.
BP’s products segment, which includes refining and petrochemical operations, is forecast to show improved earnings due to higher realized refining margins and strong oil trading. Nevertheless, planned turnaround activity was materially elevated in the second quarter, consistent with previous guidance that 1H25 would bear the bulk of refinery maintenance costs.
On the corporate side, the other businesses and corporate (OB&C) segment is expected to report a similar underlying charge to the previous quarter. This suggests no major swings in unallocated overhead or non-core segment impacts. Depreciation, depletion, and amortization (DD&A) charges are expected to remain broadly flat compared to FY24 averages, consistent with prior full-year guidance.
What is the strategic significance of the 2Q25 results ahead of BP’s capital spending, divestments, and energy transition targets?
The trading statement positions BP’s Q2 results as a balancing act between operational momentum and market-driven margin compression. The group reaffirmed its full-year capex guidance at around $14.5 billion, with divestment proceeds of $3 billion to $4 billion weighted toward the second half. Approximately $1.1 billion of Gulf of America oil spill settlement payments were expected in 2Q25, potentially compressing cash flow.
For BP, the results come at a critical juncture in its energy transition strategy. Investors are closely watching the gas and low-carbon energy segment for evidence of margin resilience, particularly in light of recent volatility in carbon and LNG markets. Meanwhile, impairment charges—if tied to legacy oil assets—may support the narrative of portfolio rebalancing, albeit at a near-term cost.
Analysts emphasized that refining and marketing strength may partially offset upstream softness in Q2, but emphasized the importance of 3Q25 performance for year-end earnings momentum. Any upside surprises in oil prices or turnaround efficiencies could strengthen investor confidence, especially as BP prepares for new project commissions and regional decarbonization initiatives.
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