In a stark sign of shifting investor sentiment, the iPhone maker was overtaken in May as the world’s most valuable company by oil producer Saudi Aramco. Shares in Apple are down almost 20 per cent this year on investor fears that the rising cost of living will curb consumer spending. But at $123 a barrel it is still at its highest level since 2012.Īt the same time, inflation and rising interest rates have weighed on the performance of those consumer-facing technology stocks, such as Apple and Alphabet, which have powered stock market gains in recent years, particularly in the US. The largest ever release from the US government’s emergency oil stocks have since helped calm prices. Oil then touched a 14-year high of $139 a barrel in March after Russia invaded Ukraine, as traders weighed whether possible sanctions would ultimately deprive the 100mn barrel a day global oil market of the 7-8mn b/d of crude and refined products that Russia exports.
Much of the relative performance of the energy majors this year can be linked to the surging oil price and the impact of inflationary fears on the rest of the stock market.Īs early as November, analysts at JPMorgan were predicting that Brent crude would hit $125 a barrel in 2022 due to resurgent demand and the inability of oil producers to boost output quickly enough after years of under-investment. “That’s not to say that oil stocks won’t continue to do well whether they have got further to rise is unclear and depends on many factors.” “If you’re buying at multiyear highs then there’s a lot of good news already factored into share prices,” Wild says. The value of oil and gas stocks has already rallied, in Shell’s case by as much as 170 per cent in the past 20 months. However, retail investors should not bank on continued share price appreciation, warns Lee Wild, head of equity strategy at retail investment platform Interactive Investor. With many analysts forecasting oil and gas prices to remain high, the two UK-listed energy majors could continue to generate bumper profits for the rest of the year, with both management teams promising to return much of the cash to shareholders via dividends and buybacks. BP is the 15th most held investment and the sixth most held share. Laura Suter, head of personal finance at investment broker AJ Bell, says Shell is currently the 13th most held asset and fifth most held share on its retail platform Youinvest. The easiest way for retail investors to gain exposure to the rally in oil and gas prices is through the shares of the biggest oil and gas producers. Indeed, despite bumper profits in 2021 and the first quarter of 2022 the supermajors have generally left spending plans for this year unchanged.
The disruption of global commodity flows due to Russia’s invasion of Ukraine had increased the need, in the short and medium term, for companies that invest in “both traditional and renewable sources of energy,” the world’s biggest asset manager said in May.īoth BP and Shell have pledged to cut future oil production and it would be near impossible for them to reverse course by dramatically increasing output, say analysts.
But since January two things have happened: Brent crude, the global benchmark, has climbed almost 60 per cent and a growing international boycott of Russia, the world’s biggest energy exporter, has pushed energy security back to the top of the policy agenda.Įven BlackRock - in the past a big backer of more aggressive corporate climate targets - has eased back on its demands that energy majors cut down their polluting oil and gas businesses.
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