BP and Shell are set to report lower profits this week as both companies deal with declining oil prices and a slowdown in global demand.
BP is scheduled to release its third-quarter earnings on Tuesday, while Shell will follow with its results on Thursday.
Earlier this month, these FTSE 100 firms alerted investors to falling profit margins in their oil refining sectors, which are key contributors to their revenues.
This decline in margins is part of a broader trend, as demand for oil weakens across both consumer and industrial markets. Since the beginning of 2024, Brent crude prices have remained relatively stable.
Recent weeks have seen prices rise slightly due to increasing tensions between Iran and Israel, raising concerns about how further conflict could affect energy facilities in the Middle East.
Two weeks ago, the Organisation of the Petroleum Exporting Countries (OPEC) downgraded its forecast for global oil demand growth for 2024 and also lowered its outlook for 2025. This marks the third consecutive reduction in their projections.
The downward adjustment highlights economic slowdowns in major economies like China and the rise in electric vehicle sales.
Analysts at Jefferies predict that Shell’s third-quarter net income will reach £5.4 billion, representing a 14 percent decline compared to last year.
Shell is expected to maintain its share buyback program to reward investors. However, with its stock down 1 percent this year, the company may face more scrutiny regarding its listing in the UK.
In April, CEO Wael Sawan sparked speculation that Shell might consider leaving the London Stock Exchange for a New York listing, describing the London market as “undervalued.”
Meanwhile, BP is projected to see a 30 percent year-on-year decline in net income, estimated at $2.3 billion (£1.7 billion). The company has previously indicated that falling refining margins could reduce its quarterly profit by $400 million to $600 million (£306 million to £459 million).
BP’s shares have dropped 14 percent this year. CEO Murray Auchincloss aims to rebuild investor confidence by scaling back plans for renewable energy and focusing more on oil and gas.
Earlier this month, Reuters reported that Auchincloss has gone a step further by abandoning the target to cut oil and gas production by 40 percent by 2030.
Bluebell Capital Partners, a London-based hedge fund, has recently written to BP’s board criticizing its management and approach to the energy transition. The activist investor, known for ousting senior executives, has also called for BP’s chair, Helge Lund, to resign.
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