BP and Shell shares rise amid US$80 oil and UK energy crisis

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BP PLC (LSE:BP.) and Royal Dutch Shell PLC (LSE:RDSB) shares were in favour on Tuesday as crude oil prices raced above US$80.


Domestically, petrol is again among the themes of the day as people continue queuing at forecourts, and the exhortation not to panic buy seemingly falls on deaf ears.


Worldwide, meanwhile, there are bigger picture economic factors at play – far beyond the post-Brexit availability of transport workers to deliver tankers from point a to point.


Brent crude is pitched at a three-year high in the wake of Hurricane Ida, which damage key infrastructure in the Gulf of Mexico, and, the impacts of petro-politics at OPEC, plus the broader industry is somewhat hamstrung by the lower investments in recent years amidst low crude prices.


City analysts at Barclays in a note point to the positives for companies like BP and Shell, which despite efforts and narratives towards renewable energies still generate huge revenues and profits from the sale of oil, gas and other petro-products.


“The strengthening fundamentals that we have seen throughout 2021 are finally starting to be reflected in share price performance, and with 2022 already setting up to continue decade high FCF, we expect further outperformance,” Barclays said.


“Unusually we rate BP, Shell and Total Energies all ‘Overweight’ reflecting value across the sector.”


Shell shares rose around 3% in London to trade at GBP16.43 whilst BP added 2.9% to 340.90p.


In crude markets, Brent continued to climb as it was changing hands at around US$80.10 per barrel up 0.7% for the day.


Similarly, the American benchmark West Texas Intermediate was 0.85% higher at around $76.09.


Naeem Aslam, chief market analyst at AvaTrade, said: “Fears of an energy crisis in Europe are supporting oil prices.


“The surge in gas prices has made oil a relatively cheaper substitute for power generation and hence its appeal has increased.”


It is not just Europe that is seeing energy problems: China is suffering power cuts after a fall in coal imports and actions taken to cut emissions.


The jump in oil prices has helped lift


Royal Dutch Shell PLC (LSE:RDSB) (LSE:RDSB) by 2.65% (for its A shares) and BP PLC (LSE:BP.) (LSE:BP.) by 1.87%.

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