Shell And TotalEnergies See Risk of Higher Oil Prices

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Commodity

Oil

Writer

IPG Staff2

Oil · 29 July, 2022

Shell And TotalEnergies See Risk of Higher Oil Prices

As oil companies begin to report their impressive Q2 results on the back of high oil prices, they are also offering premonitions of even higher oil prices on the back of the tight supply situation.

Commodity

Oil

Writer

IPG Staff2

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·      Shell’s Chief Executive Officer Ben van Beurden told
Bloomberg TV on Thursday that there is more upside than downside for crude oil
prices. “Demand hasn’t fully recovered yet and supply is definitely tight.”


 


Van Beurden added that he sees little room for more
oil production from OPEC or U.S. shale producers—and the world oil supply could
be even further curtailed as the full impact of Russia sanctions goes into
effect later this year.


 


When asked about how retail prices for oil and gas
could be lowered, van Beurden responded, “We cannot perform miracles.”


 


“Energy markets are tight,” van Beurden said, adding
that supply would be constrained and markets tight for the rest of this year
and well into next.


 


The same general sentiment was touted by TotalEnergies
CEO Patrick Pouyanne, who said he saw room for oil demand to go higher, but not
a lot of room for oil production to go higher.


 


Both Shell and Total announced plans on Thursday to
extend share buybacks on impressive results that doubled and nearly tripled Q2
2021 earnings, respectively.


 


Shell reported that second-quarter earnings hit a new
record of $11.472 billion, while Total reported a net income of $5.7 billion.


 


The tight physical market has kept a floor under oil
prices even in the face of a recession that could dent demand.


 


That tight physical market is precisely what has
emboldened TotalEnergies to forge ahead with some riskier projects in
Mozambique and Uganda.


 


The price of Brent crude oil has climbed to $107 per
barrel—up $29 per barrel since the start of the year. The oil majors’
projections that oil prices could go still higher will not come as welcomed
news to retail gasoline buyers or the Biden Administration, which has battled
high gasoline prices since taking office.
 


By Julianne Geiger / July 28, 2022 10:30AM