Total: "less impacted than competitors" according to an analyst

  •   10/03/2020 - 14h42
  •   DEHOUI Lionel

The oil prices of the big oil companies have logically collapsed following the failure of the OPEC+ meeting in Vienna on Monday. The Total share dropped 13% in Paris in the afternoon, Shell's share dropped 14% and BP's share even dropped by more than 21% in London. Note that in the United States, ExxonMobil and Chevron were also affected by 14% shortly after the opening of Wall Street.

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Russia rejects Saudi proposal to further reduce oil production

Russia did not approve the OPEC+ agreement to reduce its quotas by an additional 1.5 Mb/d. At the end of that meeting, OPEC+ did not even issue a formal communiqué. More than 20 member countries hope to reach a consensus. Although difficult, reaching such an agreement does not seem impossible. The inability of OPEC+ to reach an agreement will have significant repercussions especially on crude oil prices and may even be a source of conflict for market shares between OPEC+ member countries, says "Oddo".

"Brent is likely to continue to decline below the 27 $/b threshold reached in 2016 . The countries most affected by this crisis are those with low exposure to Downstream (Galp and Eni) and those with higher debt levels (BP and Shell). Total is not so impacted, unlike its competitors Repsol and many others add Oddo.

" Il won't have any winners, only some will suffer moins ", write UBS analysts in a note published Monday morning. The best alternative for TOTAL and its competitors would be to limit their financing. In addition, the major international oil companies can continue to make profits with a barrel of brent at 35 dollars, the price reached Monday afternoon, as they have sharply lowered their costs since the past fall in prices in 2014 and 2015. At Total for example, the " point mort " is $25. Total makes a profit as soon as a barrel of brent rises to this level.


The OPEC+ Crisis

The current failure of the negotiations represents the biggest crisis since the creation of OPEC+ in 2016. This group of more than 20 countries, including Russia and Saudi Arabia, controls more than 50% of world oil production. OPEC+ members were working to strengthen the price of crude oil, " mais also to change the geopolitical situation in the Middle East, which only increased Vladimir's influence Poutine ", in Bloomberg's view.

The failure of OPEC+ negotiations on the additional cut in crude oil proposed by Saudi Arabia and rejected by Russia could mean the end of a diplomatic alliance between the two countries.