A surge in oil trading fueled by the Iran war pushed BP $BP's underlying replacement cost profit to $3.2 billion in the first quarter, more than twice what the company earned in the same period a year ago, when it reported $1.38 billion.

BP attributed the quarterly performance to what it called "exceptional" contributions from oil trading and an improvement in midstream operations. Analysts had projected $2.6 billion, according to CNBC.

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The Iran war upended global energy markets and sent physical crude and fuel premiums sharply higher, generating the kind of turbulent trading environment in which commodity desks tend to excel, Bloomberg reported. Brent crude futures rose 43% in March, the first full month of the conflict. The International Energy Agency has labeled the chokepoint's sustained closure the gravest threat to energy security ever recorded, according to CNBC.

"Overall, our business continues to run well. This was another quarter of strong operational and financial delivery, and we made further progress towards our 2027 targets," BP $BP CEO Meg O'Neill said in a statement.

The results are the first presented by O'Neill, who took over as CEO earlier this year and has moved to restructure BP into a traditional upstream-downstream model. Rather than returning the earnings windfall to shareholders, O'Neill and CFO Kate Thomson told Bloomberg the priority is bringing down the company's debt load.

"Excess cash is going to the balance sheet," Thomson told Bloomberg. "Buybacks ultimately will remain a tool as and when appropriate, but for now we need to build back our balance sheet."

At quarter's end, BP's net debt stood at $25.3 billion, a 14% increase since December, driven largely by a $6 billion surge in working capital that the company linked to higher costs from rerouting shipments around the Strait of Hormuz. BP said it remains committed to bringing that figure down to between $14 billion and $18 billion by the close of 2027.

Output across BP's oil and gas operations came in at roughly 2.34 million barrels of oil equivalent per day, little changed from the prior quarter. For the second quarter, BP warned that upstream volumes will decline, with planned maintenance in the Gulf of Mexico and ongoing regional disruptions cited as headwinds; the company also said the war has put its full-year production on a lower trajectory overall.

The company expanded its cost-reduction ambitions, lifting the upper end of its savings target by $1 billion to reach as much as $7.5 billion in total cuts by the end of 2027. Capital spending plans for 2026 were left unchanged at $13 billion to $13.5 billion, and BP projected that asset sales and related proceeds would total between $9 billion and $10 billion over the course of the year.

BP stock is up more than 30% this year.

BP's profits more than doubled as the Iran war sent oil prices soaring

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