Oil and gas is back in fashion — at least on the stock market. Soaring fossil fuel prices, pushed higher by Russia’s invasion of Ukraine, have helped the shares of the world’s biggest energy majors outperform every other sector since the start of the year.
Shares in UK-listed Shell, Europe’s biggest oil company, are up 47% since January, while BP’s have climbed 37%. By contrast, the FTSE 100 is up less than 2%, while the S&P 500 is down 14%. France’s TotalEnergies and Italy’s Eni have risen 26% and 16% respectively. But the biggest winners are the US supermajors. Texas-based ExxonMobil is up 71%, while Chevron is up 54%.
Gemma Boothroyd, an analyst at Freetrade, says BP was consistently in the top 20 most popular stocks on its platform but added that, unusually, it had recently become more popular with younger buyers. She attributes that shift to improved performance. “Reliable profits and consistent dividends make for an attractive offering during periods of high inflation and a cost of living crunch, irrespective of an investor’s age,” she says. But BP, like most of its European peers, has sought to overhaul its image and business in the past two years and hopes more investors will come to see it as part of the solution to the climate crisis rather than the problem.
Still, many people remain deeply sceptical of Big Oil’s promises. Shell’s annual general meeting — its first in London since switching headquarters to the UK — was delayed for almost three hours by activist shareholders protesting the group’s continued development of fossil fuels. Shell has said its oil production will fall by 1-2%a year until 2030 but that it will continue to explore for new fields until 2025. “When you scratch below the surface and look at their capital spending it doesn’t align with the rhetoric,” says Richard Brooks, climate finance director at advocacy group Stand.earth. “If they were transforming in a truthful way . . . then they would be stopping expansion projects today and there would be a lot more capital investment in renewables.”