A great deal has changed since Meg O’Neill was chosen as BP chief executive in mid-December and ahead of her arrival in the hotseat on April Fools’ Day.
The price of Brent crude oil has shot up from $72 a barrel before the war on Iran to about $100 a barrel now.
That means an earnings gusher for all the oil majors. The better prospect for fossil fuel is recognised in a near-40 per cent rise in BP stock in recent months, increasing its market value to £95billion.
In her first-day message to colleagues, Big Oil’s first woman chief executive promises ‘clear direction and consistency’. That will be welcome relief for loyal BP investors, including this writer.
There has been unusual turnover at the top of BP since Bernard Looney left under a priapic cloud in 2023.
The vacuum has been filled recently by chairman Albert Manifold. He is known in the UK for switching the listing of building materials group CRH from London to New York.
Crude customers: Meg O’Neill has taken the reins as BP’s new chief exec at a time of soaring oil prices
Manifold is not a chairman sitting on his hands. In the manner of Archie Norman at Marks & Spencer he has taken firm hold of the tiller since Murray Auchincloss was jettisoned last December and temporarily replaced by Carol Howle.
His main task has been to solidify BP’s switch away from a green agenda and to manage an aggressive disposal programme designed to reduce the debt burden.
The objective is to keep activist Elliott, which campaigned for reductions in costs and capital investment, at bay.
Manifold has sprinkled a bit of magic and Elliott quietened down. Indeed, the activist may even have chosen to take a profit on its holdings, which are held in hard-to-fathom derivatives.
The current oil price and likely continued disruption in the Strait of Hormuz have much improved prospects for BP’s bets on the US, India and its stupendous discovery in Brazil’s Santos Basin. The case for capital spending on fossil fuels is much improved.
Trump’s war in the Gulf may knock the much-bruited Shell takeover of BP, to create a bigger European-based champion, off the agenda.
Coming from a previous role in Australia, O’Neill should be inured to rough politics. She would be unwise to underestimate the challenges ahead.
Chancellor Rachel Reeves has been quick off the mark in warning energy companies against profit-gouging.
BP, along with the whole sector, is set to be a big beneficiary of the oil price spurt.
The value of stocks and oil in transit will have climbed even before the next barrel was pumped. O’Neill should prepare for a row when rocketing oil and gas prices turn into a profits surge.
That is good for cashflow and paying down debt. But it will raise the ire of green activists, Labour backbenchers and Energy Secretary Ed Miliband’s groupies.
Financing fissures
Labour’s manifesto pledge of 1.5m homes in the current Parliament vanished some time ago.
Nails are being hammered into the coffin each day with the Bank of England cautioning that 5.2m households could face increases in mortgage costs between now and the final quarter of 2028.
Housebuilder Berkeley reveals it has halted land purchases, sending its shares down 9.7 per cent yesterday.
The latest cloud comes from the Bank’s financial policy committee. It notes that private credit markets were deteriorating before the war on Iran exacerbated matters.
Concerns about asset quality, valuations and liquidity, as well as AI financing, are becoming entrenched.
Fissures in the system have been exposed by managers of several retail funds deciding to suspend redemptions.
All of this as the cost of borrowing for private credit and debt management companies is rising.
That could change the economics of many deals being done in recent months.
Holiday fare
The gyrations in global oil, equity and bond markets will not make for a comfortable Passover and Easter weekend.
The Passover festival, which started with a celebratory Seder dinner last night, is a celebration of freedom from ancient Egyptian bondage.
Volatility might be a price worth paying if the shadow of Iran’s Pharaohs were eventually to be lifted.
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