BP posted higher profits on a strong oil trading performance and higher energy prices, and said it is putting its U.S. biogas business up for sale as it continues its pivot back to fossil fuels.

The British oil major reported an underlying replacement cost profit--a similar metric to the net income that U.S. oil companies report--of $5.73 billion for the second quarter of the year, surging from the $3.2 billion it reported in the first quarter.

The conflict between the U.S. and its allies and Iran is now in its sixth month. Higher prices, surging refining margins and market volatility are giving oil majors an earnings windfall. For BP, the war in the Middle East has provided a cash boost that it is using to shore up its balance sheet. Its commitment to cut net debt has coincided with a stricter approach to spending and a $20 billion divestment target by the end of 2027.

It said Tuesday that it intends to sell its U.S. biogas business Archaea, which it bought in a $4.1 billion deal in 2022. It has since written down its value significantly. The company said last week that it planned to sell its U.K. North Sea oil and gas business. The group in the most recent quarter booked an impairment of $680 million in its gas and low-carbon businesses, which include Archaea.

New Chief Executive Officer Meg O'Neill was brought in this year partly to help reverse a push into renewable energy and shift the company's focus back to its traditional oil-and-gas business. She is reviewing BP's portfolio in a strategic shake-up designed to boost profit. O'Neill said Tuesday that the company still needs to improve its balance sheet and that she is taking "urgent action" to deliver long-term value for shareholders.

"We have not delivered consistently; we have written off too much value; and our costs and liabilities are not resilient enough in a low price environment," O'Neill said.

Still, earnings jumped again as BP's customers and products division, which houses its oil-trading unit, posted yet another quarter of bumper profits.

BP's energy traders hedge the company's oil, gas and electricity production and take speculative positions within risk limits set by the company. Their strong performance follows that of peers Shell and France's TotalEnergies, which have posted bumper trading profits.

Prior to the U.S. and Israeli attacks on Iran at the end of February, roughly a fifth of the world's oil supplies passed through the Strait of Hormuz. Its subsequent closure pushed oil and gas prices higher, and triggered a scramble for jet fuel and diesel.

The clamor for fuel also boosted BP's refining margins. However, the company said it has more work to do to deliver consistent operational performance across its refineries.

In midmorning trade, shares were up 1.5% to 560.40 pence.