, Columnist
The Oil Crisis Is Even Worse News for Shell and BP
The collapse in crude prices hit indebted European companies such as BP and Shell particularly hard.
The wrong time to be in debt.
Source: Construction Photography/Avalon
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The collapse in crude prices has brought into relief the correlation between oil majors’ financial leverage and the valuation of their shares. It’s a relationship that looks like particularly bad news for the bigger European firms.
Investors’ knee-jerk reaction to the downward lurch in the oil price was, naturally, more severe toward the companies that were more indebted. So shares in BP Plc, Royal Dutch Shell Plc, Equinor ASA and Eni SpA suffered more than Total SA and the two big U.S. majors, Exxon Mobil Corp. and Chevron Corp., when European markets closed on Monday.