BP profits surge as oil prices spike and trading gains rise

Despite wider economic stagnation, BP has capitalised on soaring global energy prices, with profits more than doubling as geopolitical tensions restricted supply and pushed up oil prices. This reflects a classic case of inelastic demand: consumers and firms still require energy despite rising prices, boosting revenues disproportionately. At the same time, BP’s trading arm exploited market volatility, generating significant returns from price fluctuations. While many firms face rising costs squeezing margins, BP benefits from higher output prices exceeding costs, widening profit margins—less a miracle, more a well-timed ride on the upward shift of global supply shocks

BP profits more than double as Iran war sends oil prices higher - BBC News

1. Explain why demand for oil and gas is relatively price inelastic.

2. Examine two reasons why BP has experienced higher profits while other firms struggle.

3. Discuss whether BP’s high profits are likely to be sustained in the long run.