30/04/2021 by OilStoreAdministrator
There are indications that the oil industry’s recent dark period may have ended, as oil majors BP and Shell have slid back into profit for the first time since the pandemic began.
Both companies are committed to diversifying their businesses into low-carbon projects, but this will be a gradual process, so oil and gas production, as well as downstream operations like lubricant manufacture and retail, will remain a strong part of their businesses for some time. Fortunately, crude oil prices have risen to a more-profitable level, due to increased demand as the world’s economies have reopened and adapted to social distancing restrictions.
HSBC’s global head for research into oil and gas equity, Gordon Gray, said about the situation:
“International oil companies are used to dealing with industry cycles, but last year was especially severe across the breadth of their businesses. However, the industry has had a shot in the arm from the recovery in crude prices since late 2020, which will be evident in company results for the first time.”
BP, which also makes products like metalworking fluids under the Castrol brand, has even managed to repay its debt faster than it initially expected, enabling it to resume buying back shares.
It also seems the oil industry may enjoy another boom before the energy transition truly kicks in, with the International Energy Agency recently indicating that crude oil demand could surpass pre-pandemic levels within two years. This would inevitably support higher oil prices and benefit oil companies.
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