More than £10billion was wiped off the stock market value of Britain’s two oil supermajors after reports that Saudi Arabia is preparing to abandon its unofficial $100-a-barrel target for oil prices.
BP and Shell slipped down the FTSE 100 share index after reports from the Gulf sent the price of Brent crude down sharply by 2.5% towards $71 a barrel.
Shell’s shares dropped by 117p, or 4.6%, to £24.15 and BP lost 16½p, or 4.1%, to 383¾p, sinking while the FTSE 100 itself had an otherwise strong day, lifted by optimism about a recovery in China’s stuttering economy, according to The Times.
The International Monetary Fund has calculated that Saudi Arabia needs the oil price to hold at about $100 a barrel to balance its budget and to fund a series of multibillion-dollar projects intended by Crown Prince Mohammed bin Salman, the prime minister of the country, to diversify its petrostate economy toward tourism, technology and manufacturing.
The kingdom and other members of the Opec+ group of producers have eased their production since 2022 in a co-ordinated effort to tighten supply and maintain the oil price. Saudi Arabia lowered its production by two million barrels a day, accounting for more than a third of the reduction.
The agreement, however, is understood to be faltering, with Riyadh now planning to step up production from December to shore up its market share.
Click here to read more in The Times.
FTSE 100
The UK's flagship share index, the FTSE 100, was up 13-points at 8,296 shortly after opening this morning.
Brent crude oil futures were down 2.26%, trading at $71.80 a barrel.
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