BP shares jump after oil leak "permanently" stemmed

Shares in BP jumped over 1.8 per cent and outperformed rivals after the oil major said it had permanently sealed an oil well in the Gulf of Mexico that caused the United States' worst ever oil spill.

Jason Kenney, oil analyst at ING, said BP had hit "a significant milestone" in dealing with the disaster by plugging the well and that response costs should start to fall sharply from now on.

Tests confirmed that the cement holding in the oil had encased the leak effectively.

However, BP said compensation payouts for the Gulf of Mexico oil spill had dramatically increased since it handed authority to give funds to an independent administrator.

The company said the Gulf Coast Claims Facility, the $20bn (£17.7bn) fund it set up to compensate fishermen, hoteliers and retailers whose business was hit by the spill, had paid out 19,000 claims totalling more than $240m.

The total cost of the spill response is currently $9.5bn.

The GCCF is run by lawyer Kenneth Feinberg, formerly the Obama administration's executive pay chief.

BP said on 3 September that the fund had paid out $38.5m since it began operating on August 23 – $3.5m a day, broadly in line with the rate at which BP was paying out funds.

Since then the amount of money being paid out has risen to an average of more than $12.5m.

Just over a week ago, Bob Dudley, who will take over as BP's chief executive on 1 October, told analysts that he expected the $20bn fund to more than cover the total valid claims for compensation.