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Highlights
- UK had joined other major oil-consuming nations, including the US, India, China etc. to release about 70 million barrels of oil from their strategic reserves.
- UK plans to release 1.5 million barrels of oil, while the US has committed to releasing 50 million and India will release 5 million from their respective reserves.
- UK’s major oil companies such as Shell, BP and others are expected to undertake the oil release measure.
The UK joined other high oil-consuming countries, including the US, India, China, Japan and South Korea, to release a total of about 70 million barrels of oil from their emergency reserves, in order to cool soaring energy prices, according to media reports.
This is a previously unseen level of coordinated challenge from the largest oil consumers across the world to the Organization of the Petroleum Exporting Countries and allied members’ (OPEC+) oil cartel.
The move comes after the US government asked the OPEC+ group several times to increase the oil output at a faster rate. However, the oil cartel has thus far maintained a gradual increase of its oil production target.
The UK plans to release about 1.5 million barrels of oil from the privately held reserves, while the US said it would release about 50 million and India stated its plans to release about 5 million from their strategic oil reserves, according to reports.
Other nations like China, South Korea and Japan would be announcing the timing and their total oil release volume at a later date.
The UK’s oil release is expected to be undertaken by some of its major oil companies, including Royal Dutch Shell (LON:RDSA), BP PLC (LON:BP) and others, as the country does not have a national oil company.
Energy prices have soared this year on the back of increased global demand, and tight supply as the world slowly moves towards recovery after the pandemic.
Crude oil prices have touched multi-year highs this year. Brent crude oil Jan 22 futures were at US$ 82.61 per barrel, up by 0.36 per cent as of 24 November at 06:50 AM BST.
Let us take a look at the 2 aforementioned FTSE 100 index listed stocks in the oil and gas sector and see how they reacted to the development:
- BP PLC (LON: BP)
BP is an oil and gas supermajor. The company is currently seeking to fill about 100 roles across the world, for its hydrogen business, according to a Bloomberg report.
BP had earlier stated in 2020 that it aims to gain about 10 per cent of the hydrogen market share over the next 10 years.
Image source: Refinitiv
The company’s shares ended up by 1.5 per cent at GBX 339.40 on 23 November, while the FTSE 100 index closed at 7,266.69, up by 0.15 per cent.
BP’s market cap was at £67,195.58 million, and it had a one-year return of 33.91 per cent as of Tuesday.
- Royal Dutch Shell PLC (LON: RDSA)
Royal Dutch Shell is another oil and gas giant. The company’s subsidiary, Shell International Finance B.V. reported all of its outstanding guaranteed notes were due for redemption on 22 December.
The notes include the 2.375 per cent guaranteed notes due 2022,2.250 per cent guaranteed notes due 2023, and others.
Image source: Refinitiv
The company’s shares ended up by 1.41 per cent at GBX 1,638.20 on 23 November.
Shell’s market cap was at £67,186.51 million, and it had a one-year return of 26.11 per cent as of Tuesday.
