Here’s why Shell and BP shares have soared to a record high today

Shell and BP shares are in a strong bull market and are trading at their all-time highs as Donald Trump's war against Iran continues, pushing crude oil and natural gas prices higher. 

BP and Shell shares have pumped to a record high

BP soared to a record high of 607p on Thursday, up by 95% from its lowest level last year. Shell, on the other hand, rose to 3,600p, up substantially from last year's low of 2,203p.

Shell vs BP stocks have soared | Source: TradingView

Other global energy stocks have soared this year. In France, TotalEnergies stock jumped to a record high of €81, while in the United States, companies like Devon Energy, Chevron, and ExxonMobil have all soared. MLP companies like Energy Transfer and Enterprise Product Partners have also surged to their record highs.

The ongoing surge is happening as crude oil and natural gas prices continue rising. Brent, the global benchmark, jumped to $108, while the West Texas Intermediate (WTI), soared to $107. The two have jumped by over 75% this year. 

Gasoline prices has jumped to over $4 per gallon in the United States, while TTF and UK gas prices have jumped by over 76% and 70%, respectively.

Analysts believe that crude oil and natural gas prices are trading much higher in the physical market than in the financial market, with some oil benchmarks moving to over $130.

Most importantly, analysts believe that crude oil prices will continue rising this year as the war will continue for longer than the two weeks that President Trump expects. That’s because Iran will have a say on when the war ends because its leaders will want concessions to reopen the Strait of Hormuz.

Media reports suggest that Israel and Gulf countries are running out of defensive missiles, while evidence shows that Iran has a higher stockpile of drones and missiles than expected. 

As such, Iran may want to overextend the war for longer in a bid to prevent future attacks from the US and Israel. All these moves will push oil prices higher, with some predicting that it will surge to between $150 and $200.

Shell and BP published weak annual reports earlier this year

Soaring oil prices will come to the rescue of Shell and BP following their weak performance last year. 

In its most recent results, BP suspended its share buyback plan as it shifted to boosting its balance sheet. This happened as its underlying replacement cost profit dropped to $1.53 billion in the fourth quarter. Its annual net off profit dropped to $7.49 billion from $9 billion a year earlier.

Similarly, Shell published its weakest quarterly profit in five years as oil and gas prices dropped. Its adjusted earnings came in at $3.26 billion, missing analysts estimates of $3.53 billion. Its annual profit dropped to $18.5 billion from the previous $23.72 billion.

Therefore, the longer the war continues, the better results that BP and Shell will publish later this year.