🐂 Not all bull runs are created equal. November’s AI picks include 5 stocks up +20% eachUnlock Stocks

3 UK oil stocks to invest in as Middle East tensions rise

Published 18/04/2024, 13:37
3 UK oil stocks to invest in as Middle East tensions rise
BP
-
SHEL
-
HBR
-

The year 2024 has faced many headwinds so far – but arguably the most devastating has been the ongoing conflict in the Middle East.

With far-reaching implications, some of the markets most impacted are global oil prices.

The top three UK oil companies to invest in as Middle East tensions rise

  • Shell (LON:RDSa)
  • Harbour Energy (LON:HBR)
  • BP (LON:BP)
  • 1. Shell

    Source: TradingView

    The United Kingdom’s largest oil company by far, Shell (formerly Royal Dutch Shell), is one of the world’s biggest energy businesses.

    The company share price is up approximately 9.8% this year to date, 15.5% in the past year, and an impressive 10.35% in just the last month.

    But what is perhaps most encouraging is how Shell has successfully managed to diversify into liquefied natural gas (LNG) offerings as well as oil.

    In its most recent financial results, posted in February, the company boasted stronger-than-anticipated adjusted earnings of $7.31 billion and 2023 full year shareholder distributions of $23 billion.

    Shell said in a press release that it managed this, in spite of globally flagging oil prices during Q4, due to “strong LNG trading and optimisation results”.1

    If the company is able to show this kind of resilience in the face of geopolitical tensions in the Middle East during Q4, it can do so again as Iran and Israel’s conflict rages on.

    2. Harbour Energy

    Source: TradingView

    You may or may not have heard of it, but Harbour Energy is the United Kingdom’s biggest independent oil and gas explorer producer.

    Investing in this ‘oil indie company’ currently costs about 289.50 pence per share – far more affordable for a normal investor than big oil stocks.

    Still, it punches well above its weight, with its share price up 8.71% in the past 12 months, and 3.16% in the past month alone.

    Also, according to its latest earnings report, the company has returned $249 million through share buybacks in addition to the $200 million annual dividend, resulting in $1 billion of shareholder distributions since becoming a public company in April 2021.2

    But the reason that Harbour Energy was picked for this list is its locality: the vast majority of the company’s oil production happens within the UK and British waters.

    With essentially all of its resources firmly out of Middle Eastern territory, the company is well placed to be far less disrupted by the ongoing conflicts than, say, Shell or ExxonMobil (NYSE:XOM), or other big oil companies.

    3. BP

    Source: TradingView

    BP (formerly British Petroleum) is the second-biggest oil company in the United Kingdom after Shell, with a market capitalisation of roughly $103 billion.

    The BP share price is something of a steal lately, down roughly 6% in the past 12 months. This is largely due to its latest financial results, which said that the company’s reported quarterly profit dropped by a whopping $4 billion in Q4 of 2023. Overall, net profits for 2023 fell by more than half to $13.8 billion, after 2022’s profit of $27.7 billion.

    A large portion of that went straight back to shareholders, in the form of $2.75 billion in share buybacks.

    Nevertheless, what profits the company did generate was largely due to robust gas trading, just like Shell – and also some savvy sustainable energy ideas.

    The company has publicly stated that it is aiming for net-zero carbon emissions by 2050 or sooner.3 In its latest report on the matter, BP said that they had increased biogas volumes by 80% and biofuels production by over 18%.4

    All of this makes BP well-positioned to have a better 2024 year than 2023 – and also to be one of the most progressive oil companies in getting its ‘green energy transition’ right.

    Sources:

    1 Shell, 2024; 2 Harbour Energy, 2024; 3 BP, 2023; 4 BP, 2024

    This article first appeared on Invezz.com

    Latest comments

    Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
    Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
    Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
    It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
    Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
    © 2007-2024 - Fusion Media Limited. All Rights Reserved.