Brent crude is extending its gains this morning, with the international benchmark for oil prices now up 2.7% to $86.12 a barrel.
Meanwhile UK gilts, which are sensitive to higher oil prices, are underperforming their European peers – the yield on the 10-year is up by more than 3 basis points to 4.993%.
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While oil company profits soar, farmers across Europe are warning of a slump in food production and rising prices as crops suffer as a result of extreme heat, drought and wildfires.
Olive groves have also been hit as the climate crisis drives temperatures across the continent to fresh record highs, meaning the cost of olive oil – already at elevated levels – is expected to start rising again.
The vegetable growers association Légumes de France has warned that thousands of tonnes of products worth tens of millions of euros had been lost – including salad leaves, carrots, leeks, garlic and onion with production on certain crops expected to be halved because of the lack of rain.
The scorching French weather has also held back grape growth in wine regions including Champagne, Bordeaux and Burgundy, threatening a smaller crop and one of the earliest harvests on record.
My colleague Sarah Butler’s full story is here:
BP is reaping benefits of a 'war bonus', campaigners say
Turning back to BP, more reaction is rolling in from clean energy and environmental campaigners on its bumper profits.
Robert Palmer, deputy director of the campaign group Uplift, says:
[BP] prioritises paying shareholders over looking after workers and ordinary people whilst reaping a ‘war bonus’ because of the Iran conflict.
The war isn’t only a humanitarian disaster but an economic one for ordinary people, who have ended up paying the price of a ‘Trump Tax’ as the cost of energy rises.
Today’s profits announcement shows again that oil companies make decisions first and foremost based on the interests of their shareholders. That’s why BP put its North Sea operation up for sale last week. With around 93% of the ageing basin’s recoverable reserves already extracted, the company has logically decided there’s more money to be made elsewhere.
Given how little is left in the North Sea, politicians cannot pretend that oil and gas is now a path to growth and secure jobs - to do so is a denial of these facts and a betrayal of workers.
More drilling isn’t a jobs strategy. Nor will it take a penny off bills or make a meaningful difference to energy security – most of what’s left in the basin is oil, the vast majority of which is exported.
The Labour government must not cave in to the demands to ramp up drilling from an oil industry seeking to squeeze every last bit of profit from the North Sea before heading for the exit.
Segro agrees to £14bn takeover by Prologis
Elsewhere on the corporate front, FTSE 100 landlord Segro has agreed to a £14bn takeover by the US property group Prologis, after weeks of negotiations.
The deal, which is made up of a share offer with a partial cash alternative, values each Segro share at 1,031.7p.
Segro investors will receive 0.0920 new Prologis shares, or if they opt for the partial cash offer, 258p per Segro share and 0.0690 new Prologis shares.
The boards said it represented a 39% premium to Segro’s share price on 23 June, the day before Prologis shared its first offer, and a 14.4% premium to the company’s last reported valuation at the end of June.
Prologis said it will apply for a secondary London listing of its shares.
It is the latest in a string of London-listed companies that have agreed to takeovers by overseas buyers. Mitie, Intertek, easyJet, Beazley and Schroders have all agreed to takeovers this year.
European stock markets rise on back of corporate earnings
European stock markets have opened higher this morning thanks to a slew of corporate earning reports.
The Stoxx Europe 600, which tracks the biggest companies on the continent, is up 0.62%, led by gains in its industrial sector. The German Dax is up 0.84%, while the French Cac 40 is up 0.54%.
The UK’s blue chip FTSE 100 has opened 0.52% higher, led by its basic materials and industrial sectors. Shares in HSBC, which is its largest constituent by market value, have slipped by 0.2%, while shares in BP have risen by 1.4% this morning.
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The campaign group Positive Money has calculated that a windfall tax on bank profits could raise £19bn this year from Britain’s four biggest banks.
It found that HSBC, Barclays, Lloyds Bank and NatWest together made £29.2bn in profit in the first six months of the year, a 21% increase compared with the same period in 2025.
Positive Money estimates that a windfall tax on banks’ UK profits at a rate of 38%, which would be in line with the UK government’s windfall tax on oil and gas companies, would raise £19bn from the big four banks alone if announced in this year’s autumn Budget.
That would be enough to cover the cost of Andy Burnham’s VAT cut from electricity bills (£850m), the £2 cap on bus fares (£500m) and the business rates cut for pubs, clubs and music venues (£100m) more than 13 times over, it said.
Sara Hall, co-executive director at Positive Money, said:
Interest rate rises have landed us in a lose-lose situation: not only have they proven ineffective at taming inflation coming from overseas pressures, they’ve also handed windfall profits to banks, directly at the public’s expense.
Previous governments have allowed the powerful banking lobby to persuade them against taxing these record-breaking profits in recent years, despite overwhelming public support for the policy.
We’re calling on Andy Burnham to break with his predecessors by resisting the demands of City lobbyists and reclaiming these lost billions with a windfall tax on bank profits, the proceeds of which could be used to fund truly life-changing support for the households and businesses struggling to pay their bills right now.”
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HSBC profits surge as unions call for banks to pay more tax
HSBC has reported a 23% surge in pre-tax profit to $19.5bn for the first six months of this year, beating expectations of $18.9bn.
The London-based bank, which also has a strong presence in Hong Kong, said growth was particularly strong in its wealth management and insurance business.
It now expects to exceed $46bn in profit for the year, and announced a new share buyback of up to $1bn.
Kathleen Brooks, of the broker XTB, says that around $2bn of the increase in profits were down to one off items, “so investors may worry that this will not be repeated”.
However, profitability levels remain high, and the company expects its return on tangible equity, its main measure of profitability, to stay at 17% for this year.
These results were also heavy on shareholder sweeteners, which may boost investor interest later today. HSBC announced a second dividend for this year and a share buyback of $1bn, to be completed in the next 3 months.
The share price slipped in overnight trading in the US, and HSBC could be a victim of its own success. There is political pressure on PM Andy Burnham to tax banks more, and HSBC’s results and high profit levels could add to calls for a higher levy on the sector, which could act as a counterweight to banking stocks later on Tuesday.
Indeed the TUC is arguing this morning that there is “now a mountain of evidence” to suggest banks can afford to pay more tax.
The union body has proposed the government should use higher taxes on banks to pay for a social tariff that brings down energy bills.
TUC general secretary Paul Nowak said:
There is now a mountain of evidence to suggest that banks can easily afford to pay more tax.
While higher interest rates have meant mortgage misery and bigger bills for the rest of us, the big banks have been rolling in it.
Andy Burnham has rightly prioritised cost of living measures in his first days as prime minister, but as the war in Iran rumbles on energy prices will rise further – and the government will need to do more to protect households.
That’s why it’s time to increase the tax on bank profits to cut bills. It’s common sense and it’s the right thing to do.
Burgeoning profits at big oil companies comes as the climate crisis grips the UK and Europe this summer.
Half of England and the whole of Wales are officially in drought and July is set to be the driest month on record, envrionmental agencies have warned.
It is the third such event over the past five years, and comes after four record-breaking heatwaves since May which have fuelled huge wildfires and left farmers, wildlife and protected habitats running out of water.
Meanwhile in Europe, severe wildfires have burned across Spain and France since early July, killing people, destroying thousands of homes, and forcing more than 300,000 people to flee.
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BP’s new boss Meg O’Neill is defending its surge in profit, after Donald Trump blasted US oil companies ExxonMobil and Chevron for also reporting windfall earnings last week.
The president told reporters last night that the oil companies should “give some of that [profit] back to the public and they better cut the retail price, the consumer price.”
O’Neill told CNBC’s Squawk Box Europe this morning:
I understand the pressure that the ordinary household feels when they pull into the service station to fill up and see and see the prices. The reality is, we produce a global commodity, and the product we sell hangs off the prices for the product we sell hangs off that global commodity price.
What BP is doing is making sure that we are focused on the things we can do to try to help address the situation. We’re driving hard on reliability, both in our upstream assets where we produce those barrels and the refining assets where we refine them.
…And by way of example, we’ve made some shifts to try to produce more jet and diesel because those are the commodities that are in even shorter supply than gasoline. So we are doing what we can.
Our world-class trading organisation is also playing an important role to try to get products to customers as cost-efficiently as we can. You know, to play our role to try to tackle those prices at the pump.
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BP's surge in profits 'divorced from the public good' amid wildfires and drought
Surging profits across the oil industry, while Europe grapples with wildfires and drought, is prompting a strong backlash from environmental campaigners.
Angharad Hopkinson, a political campaigner at Greenpeace, says:
We’ve just experienced the driest July on record and BP has driven record-breaking droughts, unprecedented wildfires and extraordinary excess heatwave deaths. To cause this destruction while amassing $5.7bn in profits shows how corporate gains have become entirely divorced from the public good – ordinary people are feeling the heat when it should be the polluters paying the price.
Prolonging this parasitic relationship by trying to squeeze the last few drops of expensive oil out of the North Sea is sheer folly – perhaps the one point on which we agree with BP.
But it’s not just BP that needs to leave the North Sea, Shell and Equinor need to follow suit and give up the Jackdaw and Rosebank fields too. The government should hold fast on no new oil and gas. We need true investment in the clean energy industries of the future, which are our only dependable path to good jobs, lower bills, and long-term prosperity.”
Rosie Downes, head of campaigns at Friends of the Earth, argues that energy companies such as BP should be paying more tax:
Clearly not everyone is feeling the pain of the energy crisis. While BP banks another round of enormous profits, millions of households are paying the price through sky-high energy bills and a climate crisis accelerating rapidly out of control with increasingly severe heatwaves, wildfires and droughts.
The only way to protect people from soaring bills and climate chaos is to break our dependence on costly and polluting oil and gas by investing in energy efficiency and homegrown renewable power. Andy Burnham must back measures that make companies like BP pay more for the damage they are causing and use that money to speed up the transition to a cleaner, fairer and more secure future.”
Introduction: Oil profits spike as Middle East war fuels energy prices
Profits are surging at oil companies on the back of the spike in energy prices triggered by the war in the Middle East.
BP is the latest to reveal its windfall earnings today: its second-quarter profit more than doubled in the second quarter of this year to $5.73bn compared with the same period a year argo, beating analyst expectations.
Meanwhile Saudi Aramco, the world’s biggest oil exporter, reported a 44% increase in net profit, rising to $32.69bn in the three months ended 30 June, compared with $22.67bn a year earlier.
The spike in profits across the industry is starting to attract criticism across the political spectrum – last night president Donald Trump openly criticised US oil giants ExxonMobil and Chevron, saying they had made “too much money” on rising crude oil prices.
He told reporters at the White House:
They’re making too much money based on a shortage. I don’t like it.
It comes after both companies reported windfall profits in their second quarters last week. Chevron’s earnings surged nearly 400% to $12bn compared with $2.5bn in the same period last year. Exxon’s profits more than doubled to $14.5bn compared with $7.1bn last year.
Trump said:
Chevron, too much money. ExxonMobil, too much money,. They’re going to give some of that back to the public and they better cut the retail price, the consumer price.”
The oil price is rising again this morning, with the international benchmark Brent crude now up 1.3% to $85.08 a barrel. Fuel prices in the US are much cheaper than prices we see here in the UK – but gasoline prices averaged $4.10 per gallon in the US on Monday, nearly 40% higher compared with the $2.98 per gallon before the war with Iran started, according to the AAA.
The agenda
7am BST: Flutter interim results, BP Q2, HSBC Q2, Metro Bank Q2
9pm BST: SpaceX Q2 first earnings report since its record-breaking IPO
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