Barclays Sees 40% Q/Q Earnings Surge After Brent Hits $77; BP Wins Zacks #1
Barclays raised its European energy FY26 earnings forecasts to 30% above consensus, projecting BP and peers will see first-quarter net income rise over 40% quarter-over-quarter as Brent crude averaged $77 a barrel (up 22%) and refining margins improved. BP also received a Zacks Rank #1 Strong Buy for income investors, reflecting its compelling 2026 free-cash-flow yield of 8.6%.
1. Barclays Forecasts 30%-Above-Consensus FY26 Earnings
Barclays updated its sector forecasts to place FY26 earnings 30% above consensus, driven by expectations of more than 40% quarter-over-quarter net income growth in Q1 for majors like BP. Supply concerns tied to Middle East tensions and stronger trading results amid heightened volatility underpin this upgrade.
2. Brent Prices and Refining Margins Strengthen Outlook
Brent crude averaged $77 per barrel in Q1, marking a 22% quarter-over-quarter increase, while European gas jumped 32% and Northwest Europe refining margins improved by 9%. These commodity and margin gains are key drivers of the projected earnings rebound.
3. BP Exposure Drives Net Income Rebound
BP’s upstream oil and LNG focus positions it to capitalize on higher commodity prices and improved refining economics. Returns on capital are forecast to reach 12% at an $85 Brent price level, matching peaks seen in prior high-price environments.
4. Zacks Ranks BP #1 Strong Buy for Income
BP secured a Zacks Rank #1 Strong Buy designation on March 31, highlighted for its attractive income profile. The company’s 2026 free-cash-flow yield is projected at 8.6%, underscoring robust cash-generation potential for dividend-focused investors.