BP has warned of a looming oversupply of oil and gas as it moves to cut 700 positions across its workforce.
The FTSE 100 energy giant plans to remove hundreds of “non-frontline” staff as company executives cautioned that current tightness in the oil market is unlikely to last.
BP executives said the industry was facing a “potential oversupply and lower oil and gas prices” in the coming months, according to an email to staff first reported by Upstream Online.
The warning comes despite a sharp rise in oil and gas prices this year after the war in Iran choked off around a fifth of the world’s supply.
Brent crude hit $100 last week, with prices still trading around 30 percent above levels seen before the Iran war began.
The International Energy Agency has described the conflict as having triggered the biggest energy crisis in history, underscoring the scale of global market disruption.
Higher prices have, however, led to falling demand worldwide, with drivers shifting to electric vehicles and governments stepping up investment in green energy alternatives.
If and when the Strait of Hormuz is fully reopened, analysts expect supplies to flood back into the market, with some forecasting a surplus of more than five million barrels per day.
Gordon Birrell, BP’s executive vice president of its upstream business, told staff the oil major needed to remain “competitive at the bottom of the cycle, not just the top.”
The redundancies are understood to affect around 8 percent of positions across BP’s production and operations divisions, with senior leadership numbers set to fall by 20 percent.
The cuts arrive even as oil giants continue to benefit from elevated market prices, with Shell reporting profits more than doubled for the second consecutive quarter to almost $10bn.
BP is set to disclose its own latest financial results next Tuesday, with investors watching closely given the scale of the announced restructuring.
Under chief executive Meg O’Neill, who took the top role in April, BP has been shifting focus back to its core oil business while retreating from net zero commitments.
Her predecessor Bernard Looney had pledged to cut BP’s oil output by 40 percent by 2030 and poured billions into renewable energy, a strategy BP has been steadily dismantling.
The company has also faced significant boardroom turbulence, with chairman Albert Manifold ousted in May after just eight months following allegations of “bullying” behaviour, which he has denied.
A BP spokesman said: “We are building a simpler, stronger, more valuable BP. As part of this process, we are proposing changes that would result in a reduction in roles, intended to reduce complexity, improve accountability and support long-term performance in a changing market environment.”