After a decade of uninterrupted growth BP has taken a dive to a $5.7 billion loss last year.
Things haven’t been going well for the oil giant for a while. The oil price war, followed by the fight against climate change left BP facing multiple financial crises. As if to add insult to injury, global lockdowns, the move away from business travel and the work from home trend all left oil in short demand.
Despite all this, things started to look up at the end of last year, slowly but surely investors came back, wondering whether the new cheaper stock was a bargain to be had or a simply a fool’s folly. However further lock downs in January have hit the stock value even further.
BP shares have lost over 40% of their value in the past year and they weren’t the only ones. Royal Dutch Shell and Exxon Mobil have suffered similar blows as fuel consumption continues to slide. Despite all this the company continues to paint a positive picture for what lies ahead, insisting that oil demand is expected to recover in 2021.
For investors hoping for a recovery, there are an awful lot of things that would need to go right for BP in order to stage any sort of a comeback. Firstly, BP themselves have admitted that we are most likely already past the point of peak oil consumption. This means that any future increase in stock value would be very much reliant on the company’s commitment to renewable energy. However, in this regard BP are already on the back foot, lacking the enormous upfront financial commitment required to shift to greener energy. And as far as their competition is concerned, they are already behind in the game with companies like Orsted and Iberdrola SA already dominating the market.
Whether the rolling out of the vaccine offers some respite for the oil giant is yet to be seen, however, the market consensus of the shares as a ‘buy’ remains intact, if a little cautious.