Brent crude futures surge amid Middle East conflict, boosting European oil giants

The ongoing conflict in the Middle East has led to a significant increase in futures, which have escalated by 6%, currently trading at $89 a barrel as of Tuesday. This surge is anticipated to boost revenues for commodity-related sectors, particularly benefiting European oil giants BP (NYSE:), Shell (LON:), and TotalEnergies (EPA:). These companies have seen their shares rise between 4.5% and 7%.

Europe’s oil and gas sector has reached nine-year highs, demonstrating an annual growth of 8.3%, outpacing the STOXX 600’s growth of 6%. Analysts forecast an end-year price for Brent crude at $88 a barrel, suggesting a potential stabilization in the market.

Despite the positive outlook for the oil and gas sector, Goldman Sachs projects a 2% reduction in inflation-adjusted European earnings this year. This prediction stems from the threat posed by rising bond yields on debt costs, as highlighted by analysts.

However, Goldman Sachs also predicts a higher earnings growth of 7% next year. The firm anticipates that oil prices will hit $100 per barrel by the end of 2024, leading to companies seeing a real terms annual profit growth of 5% through 2025.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.