British energy giant BP on Tuesday (Aug 1) announced a drop in second-quarter net profit as oil and gas prices retreated from peaks reached a year earlier following Russia’s invasion of Ukraine.

Profit after tax plunged to US$1.8 billion in the three months to the end of June compared with US$9.3 billion in the second quarter last year, BP said in a statement, mirroring hefty falls across the sector.

Despite the drop, BP said it was hiking its dividend and returning US$1.5 billion to shareholders by repurchasing stock.

“This reflects confidence in our performance and the outlook for cash flow,” chief executive Bernard Looney said in the earnings statement.

Energy prices soared a year ago following the Ukraine invasion by key producer Russia, sending global inflation to the highest levels in decades while providing record profits for oil and gas companies.

Russia cut gas shipments to Europe while oil markets were also rocked by supply concerns.

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Gas and oil prices have since pulled back but remain at elevated levels.

Natural gas prices fell sharply as European countries found new suppliers, built up reserves and experienced a mild winter.

Oil prices have also tumbled, partly on fears of falling demand as the global economy slows, with major consumer China’s post-Covid recovery stumbling.

Profits remain hefty, however, as oil and gas firms pivot toward cleaner energy and away from fossil fuels. AFP