Profits at oil giants Shell and BP are set to drop following a slump in energy prices.
The FTSE 100 firms raked in record amounts of cash last year after the war in Ukraine led to spikes in the price of oil and gas.
City analysts expect BP’s profits for the first three months of 2023 to have plunged by a third to £3.4 billion, from £5 billion last year.
Taxing: Profits at oil giants Shell and BP are set to drop following a slump in energy prices
Shell is predicted to see its profits ease slightly lower to around £7 billion, according to Refinitiv data.
In the first quarter of last year, the invasion of Ukraine led to a rally in oil and gas prices amid fears that supply from Russia would be cut off.
At its peak, crude hit more than $120 a barrel in March 2022 and averaged $102 throughout the first quarter. In the first three months of 2023, it averaged $81 a barrel.
The figures call into question whether the UK Government will be able to reap as much money from the two firms through the 35 per cent windfall tax on producers in the North Sea. Shell paid £108 million last year, while BP paid £583 million.
Seventeen per cent of BP investors last week voted in favour of a radical proposal to ensure the company’s strategy is aligned with the Paris climate agreement, which aims to cap global warming to 1.5 degrees.
This could result in the group scaling back its oil and gas business. The company is already investing billions each year in renewable energy.
Boss Bernard Looney said the group was already ‘compliant’.
