Major corporations Shell and BP secured analyst approval following a surge in oil prices, reinforcing their position as leading players in the FTSE 100 index.
Lively Take: The top dogs in the FTSE 100's oil scene are making a comeback, thanks to skyrocketing oil prices courtesy of the heated Middle Eastern spat. BP and Shell, the cream of the crop, have seen their shares soar by about three percent in the past week. This surge continued as President Donald Trump publicly weighed in on the Israel-Iran tensions. Fears of potential US involvement in Israel's military action against Iran are said to be the main drivers behind the oil's price hike and subsequent big gains for Shell and BP.
As Trump hinted at exhaustion with the situation, oil prices touched $77 per barrel before taking a breather. Analysts believe these energy giants are the ones keeping the FTSE 100 afloat compared to European peers. With a market cap of £158.5bn, Shell is the second most valuable company on the UK's prestigious index. BP ranks eighth with nearly £62bn in market capitalization. Given their substantial influence, changes in their share prices greatly impact the FTSE 100's upward movement.
Turning the Tide for Oil Majors after a Rough Start
Kathleen Brooks, research director at XTB, highlights that the stock market's rally was fueled by the energy sector at the start of the week. The FTSE 100 hit 8,902.34 on Monday, buoyed by oil company performance.
In the first quarter, Shell and BP faced a turbulent road due to weakening crude oil prices caused by geopolitical uncertainty. Shell's adjusted earnings dipped to $5.58bn (£4.2bn), down from $7.73bn in the same period last year. Meanwhile, BP went as far as slashing its buyback to $750m compared to $1.75bn in the previous quarter due to weakened oil prices. This came after the price of a barrel of Brent crude fell below $70 following Trump's tariffs.
Rumors surfaced earlier this year that Shell might launch a takeover bid for BP, with the latter's stock price tumbling over 30 percent in the past 12 months. However, BP faced a significant shareholder rebellion in April during its annual meeting. Investors expressed their disapproval of BP's environmental retrenchment, highlighting it as a major concern.
[1] Sources: Reuters, Financial Times, CNBC
- Despite a challenging first quarter marked by weakening crude oil prices, the recent surge in oil prices, fueled by Middle Eastern tensions and President Trump's remarks, has seen Shell and BP's shares increase by approximately three percent, revitalizing the oil-and-gas industry within the FTSE 100.
2.with their substantial influence on the finance market, changes in the share prices of these energy giants significantly impact the upward movement of the FTSE 100, making them key players in the business world.
3.Given the uncertain geopolitical climate, and recent concerns over US involvement in the Israel-Iran tensions, the markets have been volatile, but the resilience of BP and Shell, particularly in the oil-and-gas industry, serves as a strong indicator of the industry's recovery potential.
