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Shell and BP take a beating as bank woes hit crude prices

Published: 17:03 15 Mar 2023 GMT

BP PLC -

BP PLC (LSE:BP.) and Royal Dutch Shell PLC (LSE:SHEL, NYSE:SHEL) shares have taken a hit, dropping over 8%, due to a sell-off in the banking sector.

The natural resources market has been volatile, with Brent Crude and West Texas Intermediate falling by 4-5%.

Experts believe that if there is a banking collapse, it could lead to a sustained economic downturn, which would cap demand for oil.

This comes at a time when the oilers were looking forward to a boost from China, the world’s largest industrial economy, as it emerged from lockdown.

At the close, BP was down 44p at 486.8p, while Shell was down 210p at 2,259.5p.

Elsewhere in the sector, broker Liberum reported that there was an “entente cordiale” between Saudi Arabia and Iran, mediated by China.

At the same time, there have been reports that the UAE may be leaving OPEC+, but these have been refuted by anonymous sources, and the likelihood of a split from this key player in the near term is low.

Conoco CEO Ryan Lance spoke at CERA Week, stating that OPEC's long-term market share could be reduced to 50% if nothing is done to change the current trajectory. This could mean that the Middle East will increasingly become the incremental source of oil globally, particularly as we move into the next phase of the Energy Transition.

Finally, the new CEO of Shell, Ben van Beurden, has stated that cutting oil and gas production is not healthy, as it increases energy system fragility and leads to price volatility that is not healthy for consumers.

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