BP Shares Hit 16-Year High as Oil Pivot Pays Off

BP shares jumped 3.7% on Tuesday to close at 610p, pushing back towards their highest level since 2010.

The rally came despite the oil major flagging up to $4.5bn of fresh writedowns, mostly tied to its low-carbon ‘green’ businesses. Investors looked past the hit and focused on a sharp drop in debt and bumper refining margins, a clear vote of confidence in the company's return to oil and gas.

Latest Market Moves

•        BP was the top riser on the FTSE 100 on Tuesday, closing 3.7% higher at 610p, and had been trading around 608p in early Wednesday trade.

•        BP's US-listed shares rose almost 4% on Tuesday to a fresh 52-week high.

•        Shell gained around 0.8% to roughly 3,865p on Tuesday.

•        Brent crude held above $100 a barrel throughout Tuesday and was trading around $106 as of Wednesday morning.

Writedowns Fail to Spook Investors

BP expects to book post-tax impairment charges of $3bn to $4.5bn in the third quarter, the latest in a long string of hits from its green energy push.

The company said the charges are "primarily attributable to transition businesses in the gas & low carbon energy segment." It follows a $4bn to $5bn writedown flagged for the final quarter of 2025, and similar charges in each of the two years before that.

The market now appears to treat each charge as the cost of unwinding the old strategy rather than a fresh problem.

Back to What It Knows Best

The writedowns are a by-product of BP's retreat from renewables and its renewed focus on oil and gas.

BP has already cut planned transition spending to no more than $2bn a year, down from around $7bn, and has been selling down parts of the unit, including most of its clean-energy venture portfolio. Activist investor Elliott Management, which holds more than 5% of the company, has pushed hard for exactly this shift.

Chief executive Meg O'Neill, who took over in April, will set out her first full strategy update in New York on 15 December.

Debt Falls Faster Than Expected

The real surprise was the balance sheet, with net debt set to fall to $13.5bn to $14.5bn from $22.3bn at the end of June.

That puts BP inside its $14bn to $18bn target range for the end of 2027, more than a year early. Disposals and a surge in refining profits did the heavy lifting.

BP's refining indicator margin averaged $46.70 a barrel in the quarter, up from $29.60 in the second quarter, as the Iran conflict and drone strikes on Russian refineries squeezed fuel supply. Realised refining margins are expected to add $1.9bn to $2.1bn to profit compared with the previous quarter.

Oil Above $100 Keeps the Tailwind Blowing

High energy prices are the backdrop that makes an oil-first strategy so attractive right now.

Brent has held above $100 a barrel for much of the past month because of the conflict in Iran, even after the G7 agreed last week to release 100m barrels of emergency supply. Brent actually averaged around $97 in the third quarter, down from almost $104 in the second, so BP's gains came more from refining and debt reduction than the oil price itself.

The wider sector is riding the same wave, with US energy stocks pushing to fresh highs this week and testing the records set earlier in the year.

BP Tests a 16-Year Ceiling

The monthly chart shows BP pressing against a major resistance zone between 600p and 650p.

A downtrend line from the 2010 peak capped every major rally since, including the 2018 and 2023 highs. The shares broke above it in March this year before falling back to retest the line over the summer, and that retest appears to have held.

Tuesday's surge lifted the price back above 600p, with the monthly RSI at 62 showing momentum building without looking stretched. A sustained move through 650p would clear the 2010 high and confirm a long-term breakout, while a drop back below the trendline near 540p would put the move in doubt.

Source: SpreadEx | BP, Monthly Chart