BP’s quarterly profits hit by fall in oil price

Oil giant BP has announced a sharp fall in quarterly profits as the price of oil fell significantly towards the end of the year.

Profit for the fourth quarter was $2.6 billion (£1.8 billion), a fall of 24% compared with the same period in 2007 and 74% lower than the previous quarter.

Despite the fall in profits during the last quarter of 2008, annual profits grew 39% to $25.5 billion – boosted by record oil prices during the summer.

Oil reached a high of $147 a barrel in July 2008 but dropped significantly to $40 towards the end of the year.

BP said the quarterly loss was its first in seven years and was also weak due to a loss of $700 million at its Russian joint venture TNK-BP.

BP’s profit figures were below market expectations and according to Keith Bowman, equity analyst at Hargreaves Lansdown Stockbrokers, there are still challenges within the TNK-BP venture.

Meanwhile, BP is to axe more than the 5,000 jobs it previously announced. Tony Hayward, chief executive, said that the company is aiming to slash costs, with 3,000 jobs lost last year and cuts expected to exceed 5,000 by the middle of this year.

Last week, rival oil giant, Royal Dutch Shell also announced a sharp fall in quarterly profits due to the collapse in the price of oil.

However, as with BP, Shell still announced record annual profits for 2008 – boosted by high oil prices during the summer.

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