Oil giants BP and Shell climb on President Trump’s Iran sanctions move

OIL majors BP and Royal Dutch Shell roared higher today as crude prices jumped after US President Donald Trump’s move to reimpose sanctions on Iran.

Trump’s move pushed the price of Brent crude up $2.21, or almost 3%, to $77.03 a barrel — the highest since 2014 — but the shares of some companies with exposure to Iran suffered. BP, a staple of UK pension funds, gained 9.5p, or almost 2%, to 559.9p, reaching its highest since the Deepwater Horizon disaster eight years ago. Anglo-Dutch rival Royal Dutch Shell saw similar gains, adding 56p, or 2%, to 2689p.

Iran is the Opec oil cartel’s third-largest producer, exporting up to 2.5 million barrels a day. UBS analysts forecast that Trump’s move could cut Iranian exports by up to half a million barrels a day over the next six months.

Higher oil prices and a falling pound are likely to increase the strain on UK drivers at the petrol pump. However, experts suggest that a return to $100 a barrel is unlikely as other major producers such as Saudi Arabia have committed to make up the shortfall.

John Hall of consultant Alfa Energy said: “The Saudis have said they will balance the market and they have around two million barrels of spare capacity. They have no interest in letting prices get too high as it lets in shale producers.”

Shares in companies with exposure to Iran fell, with Airbus, Renault and PSA down by as much as 2%. Boeing was also set to suffer in the US. UK-listed Serica Energy was the biggest victim, down 7.9p, or 10%, to 72.7p as it said it was assessing the potential impact of the sanctions on the Rhum field in the North Sea, which it jointly owns with the UK arm of Iran’s state oil company.