Gloomy forecast of the global economy has resulted in a drop in global oil prices which have dragged down the profits of BP for the latest quarter.

Underlying profits for the last three months of $2.3bn was reported by the oil major. In the same period a year ago, the company had reported profits of $3.8bn.

This poor performance for the quarter follows an announcement by the BP of the departure of its chief executive, Bob Dudley, after serving in the position for almost a decade. the company had said that the new chief executive to be taking his place will have a fresh plan for effective tackling of the climate crisis.

Dudley, who has been serving in BP for more than four decades, will relinquish his position early next year and Bernard Looney, BP’s head of exploration and production, would replace him in February next year. BP’s plans to prepare the business for a low-carbon future are expected to be set out Ireland-born Looney by the summer.

By the middle of next year, the “biggest challenge” to BP’s future will be directly addressed by Looney, confirmed a spokesman for the company. There is also investor pressure on the company for bettering its cash flow position, reduce its debt levels and continue with regular payments of increasing dividends.

The impact of Hurricane Barry, a number of one-off financial hits due to the falling value of its assets and weaker global oil prices were cited by BP as the causes of its dropping profits.

After the company had shutting down production in Mexico by two weeks over the summer, the company was majorly hit in terms of its oil production in the Gulf of Mexico by the tropical cyclone. Over the quarter, there was also a slump in the market price for oil to an average of $62 a barrel compared to an average price of $75 a barrel in the same period a year earlier. The market price on Tuesday was below $61 a barrel.

A $10.5bn stake in the US shale boom from BHP Billiton was agreed to be bought by the oil company about a year ago. Analysts had then viewed BP making the deal as its way of exuding confidence about the stability of the price of oil at $70 a barrel in the near future. However since then there has been a slump in the oil price.

This deal which was the largest made by BP in the last 20 years has forced the company to embark on a divestment process with a target to raise $10bn which has already seen the company being forced to write down $3.3bn on oilfields that it had divested at prices that were lower than what the company had initially valued them at.

This resulted in the company’s net debt increasing to $46.5bn compared to $38.5bn a year ago.

In recent months, the role of BP in the climate crisis has come under growing criticism. Protesters targeted the National Portrait Gallery over BP’s ongoing support earlier this month, while the Royal Shakespeare Company ended its sponsorship deal.

(Adapted from TheGuardian.com)

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