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BP Refocuses on Simplicity and Core Operations

BP (LSE:BP.) Chief Executive Meg O’Neill said the energy group will sharpen its focus on financial discipline by simplifying its portfolio, reducing costs and tightening capital allocation as it reinforces its commitment to core oil and gas operations.

Reflecting on her first 100 days in the role, O’Neill said the company is becoming more selective with investment decisions as it continues to implement its strategic reset following an unsuccessful expansion into renewable energy.

“We need to be deliberate about where we invest and where we don’t,” O’Neill said in a LinkedIn post marking her 100th day in the role. “We need to make fewer, better choices and hold ourselves to account.”

Three Priorities to Drive Long-Term Value

O’Neill identified three key areas that will shape BP’s next phase of development: improving operational performance, strengthening accountability across the business and maintaining strict discipline over costs, cash generation and capital allocation.

She said these priorities are intended to simplify the organisation while enhancing shareholder value over the longer term.

New Operating Structure Takes Effect

Earlier this month, BP completed its transition from three operating divisions to a streamlined structure built around two core business segments: upstream and downstream.

According to O’Neill, the revised organisation will reduce complexity across the company, with its trading operations serving as a link between the upstream and downstream businesses.

Energy Market Volatility Tests New Leadership

O’Neill assumed leadership of BP as conflict involving the United States, Israel and Iran disrupted global energy markets and reduced shipping activity through the Strait of Hormuz.

She said BP responded by coordinating its trading, shipping and refining operations to strengthen fuel supplies. The company delivered an additional 50 million litres of diesel from its Cherry Point refinery in Washington state to Sydney, while its Castellón refinery in Spain increased jet fuel production by 30% ahead of the European summer travel season to help meet higher demand.

Gold prices edged higher on Thursday as investors returned to safe-haven assets following renewed military action between the United States and Iran, while a steadier U.S. dollar and expectations for Federal Reserve policy remained in focus.

Spot gold climbed 0.7% to $4,104.22 per ounce, while U.S. gold futures also gained 0.7% to $4,112.75 per ounce by 05:47 ET (09:47 GMT).

Fed Minutes Provide Mixed Signals

The latest Federal Reserve meeting minutes offered support to bullion after suggesting policymakers were divided over the interest-rate outlook.

Analysts at Vital Knowledge noted that officials saw reasons to consider another rate increase during June while also discussing the possibility of easing monetary policy later this year.

Although lower interest rates generally benefit gold by reducing the opportunity cost of holding non-yielding assets, the minutes also highlighted ongoing concern about inflation remaining above target.

Price pressures in the United States have accelerated since the conflict between the U.S. and Iran intensified in late February. Federal Reserve Chair Kevin Warsh reiterated last week that bringing inflation back to the central bank’s 2% objective remains a priority.

Safe-Haven Demand Returns

Gold entered Thursday after posting losses for three consecutive sessions as rising oil prices strengthened expectations that inflation could remain elevated.

The U.S. dollar remained firm, with the dollar index trading close to the 13-month highs reached in June. A stronger greenback typically reduces demand for gold among overseas investors.

“Any rebound in energy prices will reinforce expectations that the Fed may keep interest rates higher for longer to combat stubbornly high inflation,” ANZ analysts said in a note.

The United States launched additional strikes against Iran after President Donald Trump announced that the ceasefire with Tehran was “over.”

Washington said the military action followed attacks on commercial ships travelling through the Strait of Hormuz.

Iran retaliated with strikes against what it described as U.S. military facilities in Kuwait and Bahrain, while the Islamic Revolutionary Guards Corps warned that further attacks would follow if American operations continue.

Bernstein has left its aluminium price outlook unchanged for the second half of 2026, maintaining a forecast of $3,100 per ton despite improving supply conditions following the reopening of shipping through the Strait of Hormuz and a faster recovery in Middle Eastern production.

Geopolitical Risks Fade but Supply Remains Tight

Aluminium prices rallied between March and May as concerns over the Strait of Hormuz threatened both aluminium exports and the flow of key raw materials into the market. Since the ceasefire and the resumption of maritime traffic, much of that geopolitical premium has disappeared, although physical supply remains tighter than it was before the conflict.

Emirates Global Aluminium (EGA) said its Al Taweelah smelter, which has annual production capacity of 1.6 million tons, is returning to operation sooner than expected. The company stated that “a return to pre-crisis shipment levels is expected, based on current conditions, to require the re-opening of the Strait,” while warning that a full recovery may still take up to a year.

Chinese Production Continues to Grow

Bernstein also highlighted China’s ongoing capacity expansion, with an additional 740,000 tons of annual aluminium smelting capacity expected to come online this year. That would lift total Chinese production to approximately 45.3 million tons.

While export-oriented manufacturing in China has remained resilient, domestic demand continues to be constrained by weakness in the property and construction sectors. Meanwhile, manufacturing activity has stabilised in Europe, Japan and the United States, although overall demand remains relatively soft.

Prices Expected to Stay Above $3,000

According to Bernstein, aluminium producers continue to benefit from margins that remain above historical mid-cycle averages.

The firm expects the global aluminium market to remain in deficit throughout 2026, supporting prices above $3,000 per ton before gradually returning toward longer-term equilibrium levels.

Oil prices declined on Thursday as investors evaluated the latest military developments between the United States and Iran and their potential impact on diplomatic efforts and shipping through the Strait of Hormuz.

Brent crude futures dropped $1.03, or 1.32%, to $76.99 per barrel by 07:49 GMT, while U.S. West Texas Intermediate (WTI) crude fell 88 cents, or 1.2%, to $72.64 per barrel.

Both benchmarks had reached their highest levels since June 22 during Wednesday’s trading.

Geopolitical Tensions Continue to Drive Energy Markets

Oil prices surged after Wednesday’s settlement when the U.S. launched a fresh round of strikes against Iranian targets, prompting retaliatory attacks by Iran on Kuwait and Bahrain and increasing concerns that the conflict could widen.

Washington said the operation followed Tuesday’s attack on three commercial cargo ships in the Strait of Hormuz. The latest military action came shortly after U.S. President Donald Trump announced that the interim ceasefire with Iran was “over.”

“Traders are now reassessing the situation, especially as things are very much up in the air regarding oil flows through the Strait of Hormuz,” said Tim Waterer, chief market analyst at KCM Trade.

“The possibility that the next move could be de-escalatory is what’s currently preventing oil from pushing meaningfully higher.”

Trump later added that Iran had contacted the United States “a while ago” and was looking to negotiate a new agreement.

Shipping Through Hormuz Remains Under Close Watch

Insurance market sources said several marine insurers have advised shipping companies to delay voyages through the Strait of Hormuz, while others are reviewing policy conditions following renewed attacks on commercial vessels.

Prior to the latest escalation, crude prices had been retreating as traders responded to improving Middle East supply conditions following the ceasefire agreement and evidence of rising inventories.

Around 20% of global oil and liquefied natural gas exports normally pass through the Strait of Hormuz, making the route a critical component of global energy security.

Analysts Outline Possible Scenarios

Goldman Sachs said oil market risks remain balanced.

The bank believes Gulf export flows could return to normal by the end of July if diplomatic negotiations resume, sanctions relief for Iranian oil is restored and shipping companies receive sufficient security guarantees. Such a scenario would require an additional 6.6 million barrels per day to move through the Strait of Hormuz.

However, Goldman warned that renewed attacks on tankers, stalled negotiations or tighter restrictions on Iranian exports could prolong market disruption.

“In the base case Brent probably trades in a $75–85 range over the next month, with a mild upward bias,” said Aneeka Gupta, director of macroeconomic research at WisdomTree.

“The underlying supply recovery is real but incomplete, the surplus narrative is discredited for now, and diplomatic engagement (while stalled) hasn’t collapsed entirely.”

Separately, Russia introduced a ban on diesel exports to support domestic fuel supplies following Ukrainian drone attacks that disrupted refinery operations.

Bernstein has updated its forecast for copper prices, projecting an average of $12,419 per metric ton in 2026. The research house expects prices to average $11,750 per ton during the second half of the year, slightly below the broader market consensus of $12,515 per ton.

Structural Supply Tightness Supports Long-Term View

Looking beyond next year, Bernstein expects copper to average approximately $10,700 per metric ton by 2030 as structural supply shortages become more pronounced toward the end of the decade.

The firm believes that tightening mine supply will increasingly outweigh demand growth, creating a more supportive backdrop for copper prices over the longer term.

Federal Reserve and Dollar Remain Key Headwinds

Bernstein said copper continues to face pressure from a challenging macroeconomic environment. Higher energy costs resulting from the ongoing conflict in the Middle East have weakened industrial sentiment, while the stronger U.S. dollar and expectations of a more hawkish Federal Reserve have reduced appetite across commodity markets.

These macroeconomic factors continue to weigh on price performance despite improving supply fundamentals.

Physical Copper Market Becoming Tighter

On the supply side, Bernstein pointed to lower production guidance from several mining companies and continued inventory accumulation in the United States as factors tightening the physical copper market.

According to the firm, its revised forecast reflects the balance between near-term pressures from monetary policy and currency movements and increasingly constrained physical supply, which should continue to underpin copper prices.

European wholesale natural gas prices edged lower on Thursday after climbing to their highest levels in almost a month, as traders paused to assess the impact of the latest escalation in the Middle East and its implications for the region’s energy security.

The benchmark Dutch gas contract fell 0.8% to around €48.50 per megawatt-hour after surging to its strongest level since mid-June during Wednesday’s session. In the UK, the benchmark wholesale gas contract was little changed at 116.86 pence per therm, easing back from the multi-week high reached during the previous day’s sharp energy market sell-off.

Energy Markets Face Renewed Geopolitical Uncertainty

The recent price volatility reflects renewed concerns over the security of global energy supplies following the collapse of the latest diplomatic efforts between the United States and Iran.

Only weeks after the 17 June memorandum of understanding between Washington and Tehran raised hopes that shipping through the Strait of Hormuz could remain stable, those expectations were quickly reversed.

On Wednesday, U.S. President Donald Trump declared the agreement “over”, before a second consecutive day of U.S. air strikes targeting Iranian military positions intended to protect commercial shipping routes from potential retaliation.

For Europe, which continues to rely heavily on imported liquefied natural gas (LNG) after the loss of much of its Russian pipeline supply, the renewed tensions have revived concerns over supply security. With European gas storage levels still slightly below seasonal averages, any disruption to LNG shipments from Qatar through the Persian Gulf could complicate efforts to replenish inventories ahead of winter.

Inflation Risks Return to the Fore

The consequences of higher energy prices extend well beyond wholesale gas markets. The simultaneous increase in oil and natural gas prices has revived broader concerns about inflation across Europe.

Persistently elevated wholesale gas prices risk feeding through into electricity costs for businesses and households, potentially complicating efforts by central banks to bring inflation under control after several years of aggressive monetary tightening.