BP Benefits From Iraq Oil Delays

The continued failure by America and Britain to get Iraqi oil exports back on track will help BP report very strong second-quarter figures and puts the oil firm on track for a near 35% increase in annual profits.

The high price of crude - caused by trader fears of supply shortages - was underlined in a trading statement released by Britain's biggest company yesterday.

It showed that Brent blend crude had fallen compared with the first three months of the year but still averaged over $26 per barrel in the second quarter, compared with $25 during the same period last year. UK gas prices averaged 17.44p per therm over the second quarter from 12.1p for the same quarter a year ago.

Broker Investec Securities yesterday raised its second-quarter net income estimates for BP by 10% to $2.9bn (£1.8bn) and now predicts final year profits will come in at around $11.6bn.

This would be lower than the record $12.3bn in 2000 but significantly up on the $8.7bn reached last year. Tony Alves, energy analyst at Investec, said: "In a sense the BP figures were content-free because it just gives market data that you can get from other market feeds. But the emphasis on the continuing high price of crude has led me to increase my overall estimates on crude prices and this impacts BP's future results."

Fadel Gheit, an analyst with Fahnestock & Co brokerage in New York, feared the oil price was artificially buoyed by market fears of a shortage partly as a result of the inability of Iraq to bring back its crude production as early as expected. "I fear that prices could collapse after a period of high prices as the fundamentals already are not strong," he said.

BP's powerful results on the oil and gas upstream operation contrasted with discouraging figures for margins in refining and marketing.

Since the company missed its output targets three times in a row, it has avoided giving these figures in trading updates but will provide details at the full second-quarter result announcement on July 29.