The Iran conflict had been expected to be a factor affecting London’s oil majors, but it was unclear how strong the impact would be until BP released its latest trading data this morning.

Transaction performance is clearly visible

Numbers begin to reflect reality in tangible ways. Brent crude oil prices averaged $81.13 per barrel in the first quarter, compared with $63.73 per barrel in the previous quarter, and U.S. natural gas prices also rose.
BP’s sensitivity data shows that every $1 increase in oil prices could increase annual pre-tax operating profit by about $340 million, illustrating the scale of the impact of recent oil price increases.
This is directly reflected in the results, as the company expects the oil trading unit to deliver superior results in the current quarter, as opposed to the weak results seen at the end of last year. Refining margins also rose, rising from $15.2 to $16.9 a barrel, reflecting improved real pricing.
But there are some challenges, as net debt is expected to rise to $25 to $27 billion due to an increase in working capital of $4 to $7 billion in a more volatile price environment.
The conclusion is clear: The impact of the conflict on performance is real and measurable, but with shares rising previously, the question remains whether this update provides new information or confirms what the market is already pricing in.

Momentum slows as historical levels tested

BP stock’s upward momentum accelerated when the conflict began, but began to wane as prices approached long-term resistance at the February 2023 and October 2018 highs.
Recent price action indicates a change in behavior rather than a change in trend. The strong trend turned into a narrow consolidation, the fluctuation range narrowed, and the sustainability of the rise was weak.
This behavior is common when the market reaches important levels after a strong rally, especially when most of the good news has been absorbed.
The market may experience a period of consolidation near its highs. Indicators are starting to form a triangle or wedge pattern, giving the market an opportunity to rebalance before moving next.
These periods are normal in strong trends but require patience as the next trend will depend on how the range is broken rather than the initial reaction to the news.

Daily BP candle chart

Past performance is not a reliable indicator of future results

Disclaimer: This article is for educational purposes only. The information provided does not constitute investment advice and does not take into account any investor’s personal financial situation or objectives. Any information that may be provided regarding past performance is not a reliable indicator of future results or performance.

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