BP returned to profit with a $2.8 billion second-quarter profit unveiled Tuesday as the British energy giant increased its dividend and ramped up share buybacks, joining rivals in boosting shareholder returns on the back of higher oil prices and a global recovery from the COVID-19 pandemic.

The surge in cash put wind in the sails of Chief Executive Bernard Looney's one-year-old plan to shift the company away from oil and gas to renewable and low-carbon energy in an effort to battle climate change.

Rivals including Royal Dutch Shell, TotalEnergies and Chevron also boosted shareholder returns last week in a sign of the sector's recovery from a bruising year that saw energy demand plummet due to the pandemic.

BP increased its dividend by 4% to 5.46 cents after it was halved to 5.25 cents in July 2020 for the first time in a decade in the wake of the pandemic slump.

BP also plans to repurchase $1.4 billion in the coming months after generating surplus cash of $2.4 billion in the first half of the year, it said.

In April, BP launched a $500 million buyback plan to offset dilution from an employee share distribution program.

Looney said in a statement that the measures were possible due to a stronger performance of the business as well as "an improving outlook."

BP said it expects global oil demand to recover to pre-pandemic levels sometime in the second half of 2022.

BP's underlying replacement cost profit, the company's definition of net earnings, reached $2.8 billion in the second quarter, compared with analysts' expectations for a $2.15 billion profit.

That compares with $2.63 billion in profit in the first quarter of the year and a loss of $6.68 billion a year earlier when it took large non-cash charges.

BP said it has increased its price forecast for benchmark Brent crude oil to 2030 to reflect expected supply constraints, while also lowering its longer-term price forecast because it expects an acceleration in the transition to renewable energy.

As a result, the company increased the pre-tax value of its assets by $3 billion. That comes after BP wrote down over $17 billion last year after lowering its price expectations.

The company said at an oil price of $60 a barrel, it expects to be able to buy $1 billion in shares and boost its dividend annually by 4% through 2025.

Brent oil prices rose in the second quarter to an average of $69 a barrel from $61 in the previous quarter and $29.56 a barrel in the second quarter of 2020.