BP has announced plans to cut approximately 700 jobs amid concerns of an impending oversupply in the oil and gas markets. The reductions, primarily targeting non-frontline staff, are part of a broader effort to streamline the company’s operations in response to shifting market conditions.

In an internal communication to employees, BP executives highlighted the possibility of “potential oversupply and lower oil and gas prices” in the near future, despite current elevated prices. This comes after a significant surge in oil prices earlier in the year, driven largely by disruptions stemming from the ongoing war in Iran, which has curtailed roughly 20 percent of global supply. Brent crude briefly traded at $100 per barrel last week and remains about 30 percent higher than pre-conflict levels. The International Energy Agency has described the war’s impact as sparking the largest energy crisis in history.

However, the rise in oil prices has not matched some analysts’ more optimistic forecasts, as increased adoption of electric vehicles and government investments in renewable energy have dampened demand. Some experts warn that once the Strait of Hormuz— a critical chokepoint for oil shipments— fully reopens, the global market could experience an excess supply of more than five million barrels per day.

Gordon Birrell, BP’s executive vice president of upstream operations, emphasized the company’s need to stay “competitive at the bottom of the cycle, not just the top.” The planned job cuts will affect about 8 percent of staff in BP’s production and operations sectors, with a 20 percent reduction in senior leadership roles.

These moves come even as BP and other major oil companies have benefited from elevated prices. Rival Shell recently reported second-quarter profits nearing $10 billion, more than doubling for the second quarter in a row. Shell’s chief executive, Wael Sawan, pointed to strong operational performance despite ongoing global energy market disruptions, including damage to Qatari gas fields that supply around 10 percent of the company’s output.

Shell also announced an additional $3 billion share buyback program slated for completion by October, supplementing a prior $1.2 billion initiative. The company’s shares rose 1.8 percent in early trading following the announcement.

Under the leadership of new BP CEO Meg O’Neill, who took the helm in April, BP has shifted its focus back toward its core oil operations while scaling back several net-zero initiatives championed by former CEO Bernard Looney. Looney had aimed to reduce BP’s oil production by 40 percent by 2030 and heavily invested in renewable energy but has since departed amid internal changes. The company recently faced boardroom turmoil following the removal of chairman Albert Manifold in May amid allegations of bullying, which he has denied.

A BP spokesperson stated the company is pursuing a “simpler, stronger, more valuable” strategy, involving role reductions to decrease complexity and enhance accountability while supporting long-term performance.

Meanwhile, environmental campaigners have criticized government support for carbon capture and storage initiatives, estimating that oil and gas firms will receive up to £8 billion in public funding over the next 25 years. Amira Jamal, an analyst with the group Green Alliance, called Shell’s recent high profits “expose the absurdity” of the current funding model for such technologies.