BP has halted share buy-backs after reporting weaker annual profits as it prepares to continue a plan to resuscitate its fortunes under a new chief executive.

The company’s underlying earnings fell to just below $7.5bn (£5.5bn) for 2025, from almost $9bn for 2024, after global oil prices fell for a third consecutive year and at the steepest rate since the Covid pandemic.

It said it would suspend quarterly share buy-backs from investors for the first time since the early stages of the pandemic, when a global collapse in oil prices forced the 116-year-old company to a record loss.

The decision to halt share buy-backs to strengthen its balance sheet will pile pressure on the company to win over investors with a new strategic vision after a failed attempt to pursue a green agenda.

Its incoming chief executive, Meg O’Neill – the former head of the Australian oil company Woodside Energy – will take up the role in April as BP’s third boss in as many years and is expected to enforce “rigour” to BP’s turnaround plan. Meanwhile, activist shareholders are continuing to push the company to prepare for a long-term decline in fossil fuel demand.

Carol Howle, the BP interim chief executive, said the company had made progress against its four primary targets: to grow its cashflows, to increase shareholder returns, to reduce costs and to strengthen its balance sheet through asset sales.

“There is more work to be done, and we are clear on the urgency to deliver,” Howle said. “We are in action and we can and will do better for our shareholders.”

BP said fourth-quarter earnings had fallen 30% quarter-on-quarter in the last three months of the year, to $1.54bn, though this was 32% higher than a year earlier and in line with City expectations.

BP will also face pressure from investor groups, which have criticised the decision to turn away from green investments in favour of fossil fuel projects.

“BP is in dire straits because the company has drifted without a consistent strategic direction,” said Mark van Baal, the founder of the shareholder activist group Follow This.

The group has filed a resolution before BP’s annual investor meeting in April calling for the company to disclose its strategy for creating shareholder value under scenarios of declining demand for fossil fuels.

“After a half-hearted energy transition, the company is now doubling down on fossil fuels in a market that will soon start to shrink,” he added. “If BP cannot grow profits and restore its dividend in a growing market, how will the company create shareholder value in a declining one?”

BP commissioned seven new oil and gas projects last year as part its plan to return its focus to fossil fuels after trying to move into big renewable energy investments. Five of the seven projects were delivered ahead of schedule.

Last week, rival Shell reported a 22% fall in adjusted earnings to $18.5bn (£13.6bn) for 2025, but announced $3.5bn worth of share buy-backs – its 17th consecutive quarter of at least $3bn of buy-backs.