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Summary
- A container ship caused a blockage in the crucial trade artery, Suez Canal, due to storms. The traffic was held up in the region leading to losses for certain sectors.
- Oil prices faced volatility this week due to the blockage but rebounded on Friday as WTI futures rose over 2 per cent.
Taiwanese container ship Ever Given caused a blockage in the crucial trade artery, Suez Canal, after it got stuck sideways on 23 March due to bad weather, subsequently holding up the traffic in the region. On Tuesday, Suez Canal Authority temporarily suspended movement through the shipping lane, which was later removed. Efforts are being made to restore the operations.
The Suez Canal, which is just 193 kilometers long, accounts for about 10 per cent of total global trade flows; the canal carries almost US$10 billion worth of goods every day.
In 2019, the canal had over 1 billion tonnes of goods passing through it, with over 50 ships passing per day. It is the shortest route between Europe and Asia.
Oil prices faced volatility this week before rebounding on Friday, with WTI futures rising by over 2 per cent. Some analysts expect that while the blockage had an outsized impact on oil prices, it will not have a long-term impact, unless the blockage continues for weeks. The ongoing covid-related lockdowns pose as a bigger challenge for the oil sector.
The blockade’s impact is also weak since Europe, which is the main destination of these oil ships, currently has lower demand due to the pandemic-induced lockdowns.
While the blockage had an outsized impact on oil prices earlier this week, it is likely expected to be temporary unless the blockage is dragged on for weeks. The ongoing covid-related lockdowns pose a bigger challenge for the oil and gas sector.
Also Read: Oil Prices Retreat Amid Rising Volatility Over Suez Canal Blockage
In view of this, here we take a look at some oil and gas FTSE listed stocks with a year to date return of over 10 per cent:
- Royal Dutch Shell (LON: RDS.A)
FTSE 100-listed oil and gas giant Royal Dutch Shell announced on 25 March that its net losses was about US $21.5 billion in FY 2020 in comparison to US$16.4 billion in FY 2019 as oil prices fell to historic lows amid the pandemic. The company’s revenues fell by 47 per cent or by almost US $165 billion in FY 2020.
The company has also cut dividends for the first time since World War 2 due to pandemic woes, disbursing US$7.3 billion in FY 2020 from US$15.2 billion in FY 2019.
The company’s year-to-date returns were at 11.14 per cent while the market cap was at £58.28 billion.
Its shares stood at GBX 1,441.80, up by 1.46 per cent on 26 March at 11:07 HRS GMT+1. Comparatively, the FTSE 100 index stood at 4,543.58, down by 2.23 per cent.
- Total SE (LON:TTA)
London-listed French multinational energy company Total SE recently announced a joint venture with US-based renewable energy supplier Clean Energy Fuels Corp (NASDAQ:CLNE) with an initial commitment US$100 million to develop renewable gas production facilities.
(Source: EODHD/Others, Thomson Reuters)
The company’s year-to-date returns were at 10.26 per cent while the market cap was at £85.98 billion.
Its shares stood at EUR 39.10, up by 2.50 per cent on 26 March at 11:04 HRS GMT+1. Comparatively, the UK oil and gas producers sector index stood at 4,543.58, down by 2.23 per cent.
- BP PLC (LON:BP)
FTSE 100-listed and UK-based oil and gas major BP PLC reported its CEO Bernard Looney received a remuneration of £1.735 million in 2020 due to the company’s profitability getting affected amid lockdown restrictions.
(Source: EODHD/Others, Thomson Reuters)
The company’s year-to-date returns were at 18.27 per cent, while the market cap was at £59.75 billion.
Its shares stood at GBX 301.20, up by 2.55 per cent on 26 March at 11:40 HRS GMT+1.
