News & Analysis

The consequence of opinion divides key markets: In the 'big oil' sector, some are up, some are down!

Andrew Saks, Thursday, 27 May 2021

Although control of global commodity markets by OPEC member states is relatively common and has been for several generations since the industrial revolution, differing share prices resulting from the same circumstance among similar commodities giants is relatively rare.

Today, rebellious anti-establishment and anti-capitalist organizations have demonstrated that their intention extends further than to simply project their highly politicized non-mainstream views through a megaphone in populated urban areas across Western nations which allow freedom of speech and has actually reached the courts and investors.

Friends of the Earth, an international network of environmental organizations which has presence in 74 countries that was established in San Francisco, California in 1969, has achieved one of its major goals which is to win a court battle against at least one large publicly listed oil company to legitimize its 'greenhouse gas' reduction agenda.

Dutch petrochemical giant Shell has just lost a landmark court case in Holland when a judge ordered it to ramp up its plans to cut greenhouse gas emissions, and some degree of revolution was begun in the United States where corporate titan Exxon Mobil's shareholders backed activists in their bid to reshape the company.

Chevron, an equally important oil firm has also faced a shareholder rebellion at its AGM about climate change.

Danni Hewson, financial analyst at AJ Bell told mainstream media this morning that "Climate activists have power and they've figured out how to use it."

Never mind electric vehicle usage, or individual responsibility, this is a clash of the organizations against the established energy giants.

The resultant market movements have been quite interesting and differ tremendously.

In terms of background, a lawsuit was filed in April 2019 on behalf of more than 17,000 Dutch citizens who claimed Shell was threatening human rights by investing billions in the production of fossil fuels.

The case was heard in The Hague, where Shell's headquarters are based. Yesterday, Judge Larisa Alwin backed the campaigners, and said that by 2030 Shell's net carbon emissions must be 45 per cent lower than 2019 levels.

The decision stunned investors, and Shell said it would appeal. The judgement means Shell will have to ramp up current climate policies radically to hit the target and it is expected to sell more assets and cut back exploration.

Judge Alwin said her decision would require 'a change of policy' from Shell that could 'curb the potential growth of the Shell group'.

Shell's stock has dived this morning and is trading at 1,355.20p per share, down 23.40p since yesterday, which in percentage terms is 1.70%.

Let's not lose sight of the big picture though. Whilst the climate zealots are having their five minutes of fame, it is important to note that despite a drop this morning, Shell stock is still at a higher level than all the last quarter of 2020 and at its third highest point this year.

EXXON shares, traded on the New York Stock Exchange, are slightly down today compared with yesterday because of this news, but still remain at their third highest point in 12 months, having been at 12-month highs this month until yesterday's very slight climbdown.

Chevron shares, also traded on the New York Stock Exchange demonstrate a similar story over the past 24 hours but are actually up by 0.31 points to $104.12 per share this morning, demonstrating that even large coups by environmental groups cannot dent the value of the traditional giants, even though activist hedge fund Engine No.1 won a big victory over Exxon Mobil at the company's annual general meeting recently.

Effectively, whilst there is definitely a move toward sustainable and renewable energy as well as a direction from many governments toward zero-emission energy sources, it will take a very long time to implement these, and meanwhile oil as a commodity is still volatile and valuable, and the stock of the energy companies remains relatively unharmed by this highly publicized attempt at politics by the anti-brigade.

Share article