How the Iran war boosted profits at BP and Barclays
Barclays' profits rose, but loan losses weighed on its first-quarter results. At the same time, oil giant BP’s earnings jumped, largely driven by an exceptional oil trading boom linked to the Iran war.
British multinational oil and gas company BP’s first-quarter results were boosted by sharp swings in oil prices during the Iran war, which began on 28 February 2026
The company said that underlying replacement cost profit more than doubled to $3.2 billion (€2.7bn) in the first three months of 2026.
“Underlying RC profit for the quarter was $3.2 billion, compared with $1.5 billion for the previous quarter,” the company said in a statement, adding that “compared with the fourth quarter of 2025, the underlying result reflects an exceptional oil trading contribution and stronger midstream performance.”
BP's oil trading operation posted strong profits as energy market turmoil intensified during the Iran war.
Brent crude prices rose from just above $70 per barrel in early February to over $120 per barrel in late March, before settling at around $110 per barrel in April.
Oil production and operations remained steady compared with the previous quarter, with upstream production resilient at around 2.3 million barrels of oil equivalent per day.
The company also highlighted its exposure to the Middle East, with approximately 411,000 barrels of oil equivalent per day of upstream production in the region. This includes operations in Abu Dhabi, Oman and Iraq.
BP’s share price was up by more than 2% in afternoon trading in Europe.
Barclays earnings up as trading offsets loan losses
At the same time, British bank Barclays reported steady first-quarter growth, as trading volatility linked to the Iran war boosted income, though concerns over its loan portfolio weighed on sentiment.
Shares fell around 2% by early afternoon trading in Europe.
Total income rose 6% to £8.2bn (€9.5bn), while profit before tax increased to £2.8bn (€3.2bn), up from £2.7bn (€3.1bn) a year earlier.
However, its key profitability metric — return on tangible equity (RoTE) — slipped to 13.5%, from 14.0% last year.
Rising loan losses offset some of the strong performance. Barclays booked a £228m (€264m) charge linked to the collapse of UK mortgage lender Market Financial Solutions (MFS).
Chief executive C.S. Venkatakrishnan said the bank would scale back complex lending and reduce exposure to highly leveraged companies following the hit from MFS.
In a statement, he said growth was driven by broad-based performance across the business, highlighting the strength of the investment bank. Income there exceeded £4bn (€4.6bn) for the first time in a quarter, supported by strong trading and advisory activity.
Will Howlett, financial analyst at Quilter Cheviot, said the performance was driven by equities trading amid heightened volatility since the onset of the Iran war. He noted this led to growth of 16% year on year, or 23% in US dollar terms, alongside a 17% rise in investment banking fees.
Barclays also announced a £500m (€580m) share buyback, bringing total buybacks this year to £1.5bn (€1.74bn). The bank reiterated its financial targets, citing a strong and supportive capital position.
Russ Mould, investment director at AJ Bell, described the quarter as “another bumper performance” for Barclays’ investment bank, potentially marking its strongest quarterly profit this decade.
However, he added that investors are now assessing whether recent loan losses were isolated or point to weaker lending standards.
Iran war will trigger largest energy price surge since 2022, World Bank warns
The World Bank’s latest Commodity Markets Outlook report predicts a 24% surge in energy prices this year as the Iran war delivers a historic shock to global supply chains.
The World Bank’s latest Commodity Markets Outlook, published on Tuesday, predicts a 24% surge in energy prices this year as the Iran war and the consequent blockade of the Strait of Hormuz deliver a historic shock to global markets.
This projected increase represents the most significant energy price spike since Russia's full-scale invasion of Ukraine in 2022, threatening to entrench high inflation and stall economic progress in developing nations.
According to the report, global commodity markets face their most volatile period in four years, with energy and fertiliser prices expected to lead a broad 16% rise in overall commodity costs during 2026.
The regional instability has already resulted in the largest oil supply disruption on record, with global production falling by over 10 million barrels per day during the crisis.
While some prices have moderated from their initial peaks, the study shows that the lingering effects of infrastructure attacks and shipping bottlenecks in the Strait of Hormuz will keep energy costs at elevated levels for the foreseeable future.
Analysts suggest that the current turmoil has effectively reversed the downward trend in commodity prices that had been observed throughout the previous year, creating an environment of stagflation and making it difficult for central banks to manage rates.
Ayhan Kose, the World Bank’s deputy chief economist, further stated that governments must resist the temptation of broad and untargeted fiscal support that could distort markets and instead focus on temporary aid for the most vulnerable households to navigate the coming months of economic uncertainty.
Oil and gas markets in the eye of the storm
The primary driver of the current market instability is the unprecedented disruption to shipping routes in the Middle East.
The Strait of Hormuz, a critical maritime passage that handles approximately 20% of the world’s seaborne crude oil trade, has seen effectively a halt on traffic during the war.
According to the World Bank, Brent crude oil is now forecast to average $86 a barrel throughout 2026, which marks a sharp increase from the $69 average recorded in 2025.
This forecast rests on the assumption that the most severe disruptions will begin to ease by May and that shipping volumes will gradually return to pre-war levels by the end of the year.
At the time of writing, US benchmark crude, WTI, is above $102 a barrel, while Brent crude, the international standard, is over $110 for the first time in three weeks.
The UAE also announced on Tuesday that it is leaving OPEC and OPEC+ effective on 1 May, with the UAE energy minister citing a restructuring of the country's energy strategy "to help meet changing demand" and promising a "gradual boost to oil production".
It remains to be seen whether the added supply will contribute to lowering prices or if less coordination among major oil suppliers will actually be disadvantageous amid the crisis.
The World Bank warns that if the conflict proves more protracted or spreads to involve more regional actors, the pressure on prices will only intensify. Even under the current baseline, the shock has already caused significant ripples through other energy sectors.
The study shows that the volatility in the oil market has direct consequences for natural gas and liquefied natural gas (LNG) benchmarks, as countries scramble to secure alternative energy supplies.
The European Union has already spent over €27 billion in additional costs for fossil fuel imports since the Iran war began. The IEA is also already calling the situation the biggest energy security threat in history.
This heightened cost of fuel is expected to dampen global growth, with serious implications for job creation and industrial development across both emerging and advanced economies.
This month, the IMF cut its 2026 global growth forecast to 3.1%, down 0.2% from its previous projection, and lowered its estimate for the eurozone to 1.1% from 1.4%
The war also drove the IMF's global inflation expectations up to 4.4%, and if energy volatility persists into 2027, the fund warns of a "severe scenario" where global growth could plummet to 2%.
Geopolitical volatility and the ripple effect
A special focus section of the World Bank report highlights the disproportionate impact of geopolitical risk on market stability. The analysis finds that oil price volatility during periods of rising conflict is roughly twice as high as during calmer periods.
Specifically, the study indicates that a geopolitically driven 1% decline in global oil production typically pushes prices up by an average of 11.5%.
These shocks have a powerful "spillover" effect, with the impact on other commodity markets being about 50% larger than under normal conditions.
According to the report, a 10% increase in oil prices triggered by a geopolitical shock leads to natural gas prices peaking 7% higher and fertiliser prices rising by more than 5% approximately one year later.
These lagging effects mean that even if the conflict in the Middle East resolves in the near term, the global economy will likely continue to feel the inflationary pressure well into next year.
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