Shell's shares slip on up to $4.5 bln writedown
Shell is one of the biggest losers on London’s FTSE 100 after it flagged an up to $4.5 bln impairment charge for Q4.
This is mainly related to the Singapore refining and chemicals hub the oil major is looking to sell. IGTV financial analyst, Angeline Ong, explains how this latest news relates to the weaker oil price narrative.
(AI Video Summary)
Shell share price drops 2% on FTSE 100
Shell, one of the biggest companies in the oil industry, has had a difficult year. Its stock on the FTSE 100, a stock exchange in the UK, has dropped by around 2%. Recently, the company announced that it would have to accept losses of around $2.5 billion to $4.5 billion in the fourth quarter of the year. This is because their refining and chemicals hub in Singapore, which includes a refinery and an ethylene plant, is not making as much money as they had hoped.
BP shares also fall
Despite these challenges, Shell's stock has actually gone up by more than 10% in 2023. However, another major player in the industry, BP, has not been so fortunate. Its shares have also fallen, but not by as much as Shell, only by three quarters of a percent. The main reason for the struggles of both companies is the low price of oil in the market. Because of this, Shell has already started getting rid of areas of their business that aren't making a profit and cutting costs. For example, in October they announced job cuts in their low carbon division, which focuses on clean energy, and a search for ways to be more efficient.
If oil prices stay low and the market remains volatile, it is likely that both Shell and BP will have to take more steps to prevent further losses. This could mean accepting more losses and finding more ways to cut costs. Ultimately, how well the companies do in the future will depend a lot on how oil prices change and how well they are able to adapt to the changing market.
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
Act on share opportunities today
Go long or short on thousands of international stocks with spread bets and CFDs.
- Get full exposure for a comparatively small deposit
- Trade on spreads from just 0.1%
- Get greater order book visibility with direct market access
See opportunity on a stock?
Try a risk-free trade in your demo account, and see whether you’re on to something.
- Log in to your demo
- Take your position
- See whether your hunch pays off
See opportunity on a stock?
Don’t miss your chance – upgrade to a live account to take advantage.
- Trade a huge range of popular stocks
- Analyse and deal seamlessly on fast, intuitive charts
- See and react to breaking news in-platform
See opportunity on a stock?
Don’t miss your chance. Log in to take advantage while conditions prevail.
Live prices on most popular markets
- Equities
- Indices
- Forex
- Commodities
Prices above are subject to our website terms and agreements. Prices are indicative only. All share prices are delayed by at least 15 minutes.
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.
