Oil companies come under City spotlight
LONDON’S TWO biggest oil companies are preparing to report their results for a year which has included a giant price war between Saudi Arabia, a drop in oil prices due to Covid and massive write-offs.
At the beginning of 2020 all eyes were on the Organisation of the Petroleum Exporting Countries (Opec) whose agreement with Russia to artificially reduce supply and therefore push up oil prices came to a close.
The two parties could not conclude a new agreement, and instead Russia and Saudi Arabia started a production war, pushing down global prices.
Brent crude, the international standard, had started the year on around $61 per barrel, but dropped to $55 before the end of January.
But this was nothing compared to the disruption caused by the pandemic. Within two months the price of Brent had hit less than $39, and it even briefly dipped below $19 in April. This in part forced Shell and BP, who report full-year results this week, to reduce the expected price they will receive for the oil they had already found, and write down the value of their assets by billions of dollars.
Last year, Bernard Looney became BP’s chief executive, promising to steer the ship on a new course.
The Share Centre said: “Given the oil price recovery, combined with a difficult long-term global economic scenario, we may see a mixed outlook for the year from management. Meanwhile, the crisis has brought environmental issues more to the fore, so we should see more commentary on plans to replace fossil fuels with renewables.”