Oil giant BP has said it is now set for an “exceptional” oil trading result in the first three months of the year after the Iran war sent the cost of crude soaring.

The FTSE 100 firm upgraded its first quarter oil trading guidance, which follows a “weak” out-turn for the division in the final quarter of 2025.

BP said it was seeing “impacts associated with the ongoing situation in the Middle East and the current market conditions resulting in heightened volatility in crude oil, natural gas and refined products prices in the latter part of the first quarter”.

“These market conditions are expected to impact financial results, including trading results and working capital movements,” it added, pointing to an increased impact of so-called price lags.

Oil prices have surged higher since the US-Israel war on Iran started on February 28 and are now more than 60% up so far this year.

Brent crude reached close to 120 US dollars a barrel at one stage and is still hovering around the 100 dollars level as peace talks falter and amid fears over a looming global energy supply crisis.

BP said Brent crude prices averaged 81.13 dollars a barrel over the first quarter as a whole, which includes just over four weeks of volatility caused by the Middle East conflict.

This is up sharply from 63.73 dollars a barrel in the previous three months.

Every one dollar movement per barrel in oil prices leads to a 340 million-dollar (£251 million) impact on pre-tax operating profits, according to BP.

BP said upstream production was now expected to be broadly flat compared with the previous quarter, while oil production would be slightly lower, adding that net debt was set to increase to between 25 and 27 billion US dollars (£18.5 billion to £20 billion), up from 22.2 billion dollars (£16.4 billion) in the fourth quarter.

The firm will report first quarter figures on April 28.

BP shares fell around 1% in Tuesday morning trading as oil prices edged below 100 US dollars a barrel on that latest hopes of a revival in US-Iran negotiations.

Susannah Streeter, chief investment strategist at Wealth Club, said: “Crude prices have dipped back a little as hopes rise for fresh talks to end the Iran conflict, but the squeeze on energy supplies is likely to remain a disruptive force, and markets are set to stay jittery.

“BP’s trading update reflects this uncertainty, with the company highlighting that volatile commodity markets will be a key feature of its first-quarter results.”

She added that net debt at BP is rising “because more cash is being tied up in day-to-day operations”.

“As oil prices rise, BP is likely to need more money to hold the same barrels and to keep its trading activity running, which pushes up borrowing in the short term,” she said.

Fellow FTSE 100 oil major Shell last week also said the recent spike in prices was boosting trading in its chemical and products business, which includes oil trading.

But Shell cut its guidance for first quarter integrated gas production after volumes from Qatar were particularly impacted during recent attacks.

Last month, Shell’s PearlGTL site in Qatar stopped production after being hit during attacks while LNG facilities in the country partly owned by Shell have also been impacted.

BP’s upcoming first quarter results will be the first under new chief executive Meg O’Neill, who took over on April 1.

She replaced Murray Auchincloss, who was ousted last year as part of a leadership overhaul by new chairman Albert Manifold.

The Uttar Pradesh government on Tuesday approved an interim hike of around 21% in minimum wages for workers in Gautam Buddh Nagar and Ghaziabad, following large-scale protests by thousands of factory workers in Noida. The fresh minimum wage structure introduced across worker categories, will be taking effect retrospectively from April 1. The agitation, which had been intensifying over several days, saw an estimated 40,000 to 45,000 workers assemble at nearly 80 to 83 locations across the Gautam Buddh Nagar commissionerate, including key industrial hubs such as Sector 62, Phase-2, Sector 63, Sector 60, Sector 84 and parts of Greater Noida. The revised wages were finalised by the high-powered committee and received approval late on Monday night. Gautam Buddh Nagar District Magistrate Medha Roopam said, “The wage increase has been done by the high-powered committee… The decision was approved by CM UP late last night.”

Breakdown: Who gets what

Gautam Buddh Nagar and GhaziabadThese regions have seen the sharpest revision:

Other municipal corporation areas

In other districts

Additionally, Uttar Pradesh CM Yogi Adityanath has urged employers to ensure timely wage payments, provide appropriate overtime compensation, and guarantee weekly offs, bonuses and social security benefits, while also maintaining safe working conditions, especially for female workersThe wage revision comes after widespread protests by factory workers in Noida on Monday, where thousands raised demands for better pay and working conditions. Clashes broke out in parts of the district during the demonstrations, after which the government set up a committee to step in and facilitate discussions between workers and employers.The government said that it had assessed all feedback and objections before finalising the revision, aiming for the “balanced and practical” outcome.As per the official statement, the committee is working to resolve the issue through dialogue and coordination while considering measures to address industries dealing with global headwinds, including rising input costs and falling exports, even as workers’ demands on wages, overtime, safety and working conditions remain “relevant and important.”It further added that an interim wage revision linked to indexation is under consideration, and that the process for final wage determination will be taken up based on recommendations of a wage board to be formed soon.At the same time, the government rejected as “fake and misleading” social media claims suggesting a uniform minimum wage of Rs 20,000 per month, clarifying that no such order has been issued and that work on fixing a national “floor wage” is still underway at the central level.

Oil prices fell sharply on Tuesday despite heightened tensions in the Middle East, as markets bet on a possible diplomatic breakthrough between the United States and Iran even after Washington moved to block Iranian ports.

Brent crude dropped 2.7% to $96.66 a barrel, while US crude slid 3% to $96.13, with traders weighing signs that talks could still resume following the collapse of weekend negotiations.

Sources told Reuters that both sides have kept the door open to dialogue, while a US official pointed to forward movement towards a potential agreement.

The United States has continued to engage Tehran even as its military enforced a blockade of Iranian ports, a move aimed at increasing pressure after talks failed to deliver a deal.

US President Donald Trump said on Monday that Iran had “called this morning” and “they’d like to work a deal”, although the claim could not be independently verified.

“The failed weekend talks did not produce a deal, but they also did not close the door on diplomacy, and that is enough for equities to keep pushing higher for now,” said Charu Chanana, chief investment strategist at Saxo.

Reflecting that optimism, Asian equities advanced in early trade. MSCI’s broadest index of Asia-Pacific shares outside Japan rose 1%, while Japan’s Nikkei and South Korea’s Kospi each gained more than 2%.

Futures also pointed to a steady global outlook, with Nasdaq futures up 0.13%, S&P 500 futures flat, EUROSTOXX 50 futures rising 0.63%, and DAX futures adding 0.77%, following an overnight rally on Wall Street.

The US dollar, often seen as a safe haven, weakened alongside oil as investors shifted towards riskier assets.

“Markets are trading hope, not resolution,” said Chanana.

Analysts said Washington’s blockade strategy could shift pressure onto Tehran without immediate escalation on the ground.

“The US has actually played that trump card… it’s now forced the Iranians back to the drawing board,” said Tony Sycamore, a market analyst at IG.

Dollar on backfoot

The dollar fell to a 1-1/2-month low of 98.328 against a basket of currencies on Tuesday, as buoyant risk sentiment dampened demand for the world’s reserve currency.

That left the euro trading 0.05% higher at $1.1764 while sterling GBP= rose to a more than six-week peak of $1.3514.

“The US and Iran have started to walk down the path of coming up to an agreement,” said Joseph Capurso, a strategist at Commonwealth Bank of Australia.

However, “the markets are still facing a global economic outlook that is deteriorating, and I think the risks are high that you get equity markets and credit markets and the like fall again, and that would push up the US dollar against probably all currencies.”

US Treasury yields were little changed, with the two-year yield last at 3.7722% while the benchmark 10-year yield stood at 4.2854%.

The inflationary pulse from the steep rise in energy prices has prompted investors to prepare for the possibility that a number of major central banks will lean towards raising rates, marking a sharp reversal from expectations before the war for rate cuts or a prolonged pause.

Elsewhere, spot gold was up 0.7% at $4,771.81 an ounce.