BP warns of weaker refining margins, higher debt in Q3 amid demand slowdown

BP (NYSE:BP) has become the latest oil refining major to warn of lower profitability in the latest quarter amid an industry-wide slowdown in fuel demand.

The U.K. oil and gas company said it now expects broadly flat production across upstream operations, oil production and in gas and low carbon energy. The oil production and operations segment is expected to see a negative impact of $100M-$300M from price lags on production in the UAE and Gulf of Mexico.

BP also expects to incur a $200M-$300M negative impact from higher exploration write-offs. Its products segment will be hurt by broadly flat fuel margins and a $400M-$600M decline in realized refining margins.

Net debt is also set to be higher due to the weaker margins and rephasing of around $1B in divestment proceeds into the fourth quarter.

Shell (SHEL) and Exxon Mobil (XOM) have also warned of lower profitability amid a slide in oil product trading and oil prices. Year-to-date, NYSE-listed shares of BP have fallen around 7%, while shares of Shell and Exxon have gained nearly 4.4% and 20%, respectively.

Front-month Nymex crude oil (CL1:COM) has dropped nearly -12% and front-month Brent (CO1:COM) -13% in the last six months.