10:16

Bernard Looney, the boss of BP, has warned that the oil company faces a “brutal business environment” ahead of its first quarter financial results next week.

Looney will deliver his first financial update as BP’s new chief executive on Tuesday, amid the deepest oil price crisis on record and just one week after oil prices turned negative in the US oil markets for the first time in history.

He said the impact of the coronavirus outbreak combined with the oil market collapse “remains a brutal business environment”, in a social media update posted to LinkedIn and Instagram:

“We saw it in the negative oil prices this week. That’s not just unprecedented - it is staggering.”

The admission is likely to raise questions among investors over whether BP may choose to break a cornerstone oil industry taboo and scrap its dividend policy.



Norway’s state oil giant Equinor emerged as the first oil major to cut shareholder payouts for this quarter after oil prices tumbled 80% since the outbreak of the coronavirus in January this year.

Analysts at HSBC believe a dividend cut in the current environment could be the right strategic move by making a virtue of a weakness.

“It has been interesting to see other sectors where dividend cuts have been seen in the market to some degree as being ‘the right thing to do’ in the current environment,” the bankers said in a research note.

“The oil sector is somewhat different in this regard but the sentiment backdrop is one where there is a degree of ‘moral positive’ to lower dividends”.

That would be a new one for the oil industry, but then again these circumstances are not just unprecedented - they’re staggering.