BP & Diversified Energy: Should you hold these energy stocks?

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 BP & Diversified Energy: Should you hold these energy stocks?
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Highlights

  • BoE’s Governor Andrew Bailey has warned that the inflation-adjusted incomes or real incomes of Brits would receive the biggest shock since any year of the 1970s, mainly because of the Russia-Ukraine war.
  • Since April 2021, there has been a 19.2% rise in electricity prices, while there has been a 28.3% increase in gas prices over the past year.

The UK inflation levels have been touching the roof over the past months, and the inflationary situation has further worsened due to the Russia-Ukraine war. BoE’s Governor Andrew Bailey has recently said at an event in Brussels that the Western sanctions on Russia have led to a significant hike in oil and gas prices. These soaring energy costs have created a cost-of-living crisis for Britons, which hasn’t been witnessed for over three decades.

Bailey warned that the inflation-adjusted incomes or real incomes of Brits are set to receive the biggest shock since the 1970s, mainly because of the war. He added that even though the shock in the 70s was built over the years and hopefully won’t happen now, still this is a very big blow from rising energy prices in a single year.

The financial stability of the UK has been threatened due to the soaring inflationary pressure, and the growth of the economy has slumped due to rising costs of energy as well as other goods and services. Since April 2021, there has been a 19.2% hike in electricity prices, while there has been a 28.3% increase in gas prices over the past year.

The surging oil and gas prices may push the UK inflation level to 8% by this spring. To avoid a recession that may happen due to the slump in economic activity, the BoE has been going for interest rate hikes. In March, the third consecutive hike took the rates to 0.75%, which may go further up to 1% in May.

Let’s look at 2 UK energy stocks that investors can keep an eye on amid the soaring inflationary pressure. 

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Energy stocks to watch amid rising inflation 

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BP plc (LON: BP)

BP plc, which is a component of the FTSE 100 index, is an oil and gas supermajor. It has given its shareholders a return of 26.38% over the last one year as of 29 March 2022, while its return stands at 15.72% on a year-to-date basis. With a market cap of £74,137.42 million, BP plc’s shares were trading at GBX 382.50, up by 0.42%, at 8:04 AM (GMT +1) on 29 March 2022.

Why Did Russia Invade Ukraine?

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Diversified Energy Company plc (LON: DEC)

Diversified Energy Company plc, which is a component of the FTSE 250 index, is an independent oil and gas production business.

It has given its shareholders a return of 4.68% over the last one year as of 29 March 2022, while its return stands at 12.70% on a year-to-date basis. With a market cap of £991.15 million, Diversified Energy Company plc’s shares were trading at GBX 117.20, up by 0.52%, at 8:14 AM (GMT +1) on 29 March 2022.

Note: The above content constitutes a very preliminary observation or view based on market trends and is of limited scope without any in-depth fundamental valuation or technical analysis. Any interest in stocks or sectors should be thoroughly evaluated taking into consideration the associated risks.

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