Oil prices witness a significant surge following Israeli attacks on Iran, boosting shares of companies like Shell, BP, and others, amidst increased demand and tensions in the region.
In the wee hours of Friday, news of an Israeli attack on Iranian cities and nuclear facilities sparked a frenzy in global oil markets. The price of Brent crude for August delivery skyrocketed by as much as 13%, touching an impressive high of $78.50 per barrel, a level last seen since January. Despite a slight dip in trading later, Brent crude was still up $6.28 or 9.1%, trading at $75.64. The US benchmark WTI for July delivery also saw a significant surge, increasing more than $6 or over 9% to reach $74.45.
The Israeli military strike, which targeted one of Iran's main nuclear facilities according to the International Atomic Energy Agency (IAEA), sent shockwaves throughout the energy sector. The previous day's withdrawal of US diplomats from neighboring Iraq had already hinted at a potential escalation, but Iran reported no damage to oil facilities in the Israeli attacks by morning.
The price rally was unstoppable, as oil stocks soared on the Tradegate trading platform. TotalEnergies and Shell were up by over 3% and 2.5%, respectively, while Chevron and BP were ahead by 3% and 4.2%. This seems to indicate that the correction in oil stocks is finally over, which had been steadily building a strong base in recent weeks and beginning to recover.
Investors remain optimistic about BP, Shell, and Chevron. AKTIONÄR, in particular, remains bullish on Shell in the long term due to its robust cost structure, wide market position, and solid balance sheet. The stock also offers a handsome dividend yield and looks attractively valued. TotalEnergies is also a sound choice, thanks to its strong positioning and diversification. AKTIONÄR had previously recommended being courageous and betting on a price recovery with a stop-loss at €41.00.
However, it's important to note that the management and majority shareholder of the publisher Börsenmedien AG, Mr. Bernd Förtsch, holds direct and indirect positions in TotalEnergies, which could benefit from the potential price development resulting from this publication.
Interestingly, geopolitical tensions, especially those involving key oil-producing nations like Iran, can significantly impact oil prices. Such a disruption in oil supplies might drive up oil prices due to apprehensions regarding the stability of the supply chain. In this volatile landscape, major oil companies like BP, Shell, Chevron, and TotalEnergies are often affected by changes in oil prices. Higher oil prices could result in increased revenues for these companies, potentially boosting their stock prices. However, a company's strategic focus and geopolitical exposure would play a decisive role in the extent of this impact. For instance, companies like TotalEnergies, which are diversifying into renewable energy, may be less exposed to oil price fluctuations compared to companies more focused on traditional oil and gas operations like Chevron.
- The current surge in oil prices, following the Israeli attack on Iranian cities and nuclear facilities, is indicative of the sensitivity of the oil-and-gas industry to war-and-conflicts and general-news events.
- In the energy sector, businesses like BP, Shell, and Chevron are particularly vulnerable to changes in oil prices, thus politics and geopolitical tensions can significantly impact their stocks and financial performance.
- The robust cost structure, wide market position, and solid balance sheet of companies like Shell make it a preferred choice for long-term investors, even in the face of industry-wide volatility caused by energy conflicts.
- The impact of geopolitical tensions on oil prices and companies can vary based on their strategic focus and geopolitical exposure; for example, companies like TotalEnergies, with a focus on renewable energy, might be less exposed to oil price fluctuations compared to companies more focused on traditional oil-and-gas operations.
