BP plunged to a loss for the first three months of the year amid rising debt and plummeting global oil prices but will still pay its shareholders a rising dividend. The collapse in oil demand due to the coronavirus pandemic drove BP to a $628m (£505m) loss for the first quarter, compared with a profit of $2bn in the same period last year. BP said the “exceptionally challenging” market conditions caused the company’s underlying replacement cost profits, its preferred profit metric, to tumble by two-thirds to $791m for the quarter compared with $2.35bn last year. The oil giant told investors it faces an “exceptional level of uncertainty” and the risk of “more sustained consequences” ahead, including higher debt, lower spending and cuts to its workforce. But the FTSE 100 energy company will still pay shareholders, including thousands of retail investors and pension funds, a dividend for the past three months. “Our industry has been hit by supply and demand shocks on a scale never seen before, but that is no excuse to turn inward,” said BP boss Bernard Looney. “It is brutal, the future is unknowable, but equally I am confident that we will get through this.” BP will maintain its shareholder dividend for the quarter with a payout of 10.5 cents a share, up 2.4% from last year’s first-quarter payout, amid rising speculation that major oil firms will need to break a long-held taboo by cutting dividends to survive the coronavirus crisis. BP has cut its dividend only twice in the last 30 years, the latest was in the wake of the Deepwater Horizon tragedy in 2010, which led to 11 fatalities and financial costs of more than $65bn. “We have been tested many times over our history. But we always respond, and we know how to respond,” Looney told investors. The oil market crisis, which has caused prices to plummet to 21-year lows and even turn negative in the US, has emerged as BP prepares to undertake a major corporate overhaul to push it towards an ambition to be ‘net zero’ by 2050. Looney told the Guardian that no BP employees will leave the company over the next three months although job cuts are expected by the end of the year as part of the planned restructuring which remains on track. Analysts have warned that BP’s commitment to the dividend may come at a cost. BP’s debt has climbed by almost $6bn in recent months to reach $51.4bn in the first quarter. Analysts expect it will continue to rise over the year. “The key question at this point is how far BP is willing to push the balance sheet in order to protect its dividend,” said Biraj Borkhataria, an analyst at RBC Capital. “As if it does, it will likely spend the balance of 2020 and 2021 trying to pay down debt.” BP has also announced a 25% cut in spending in response to the coronavirus outbreak to around $12bn for 2020, and new borrowing facilities to increase its liquidity. Nicholas Hyett, equity analyst at Hargreaves Lansdown, said “drastic cuts” to BP’s spending plans “should help ease the pressure for now”. “But longer term the group needs higher oil prices or lower operating costs, and ideally both.” BP expects to be able to dramatically lower its costs so it can balance its books even from a breakeven oil price of $56 a barrel last year to $35 a barrel for 2020. The average oil price in the first quarter of the year was $50 a barrel, compared with $63 a barrel in the first quarter of 2019. In the last week the price of Brent crude, the international oil price benchmark, fell to $16 a barrel.