Published On: Sun, Jul 30th, 2017

Oil giants BP and Shell hit back at threat to demand and drive towards electric cars

Profits are being squeezed by the low oil price, which remains stranded at around $50 a barrel.

Last week the , following France, Germany and Norway, while Swedish car manufacturer Volvo will only release electric or hybrid models from 2019.

Experts say this will make it even harder for oil cartel OPEC to reverse recent price falls by cutting production.

However, last week Shell defied the sceptics to post quarterly profits of $3.7 billion (£2.8 billion) and Nicholas Hyett, equity analyst at Hargreaves Lansdown said: “Achieving these results at today’s oil price while integrating its acquisition of BG Group is undeniably impressive, even if less of its profit actually comes from pumping oil.”

BP reports second-quarter results on Tuesday with analysts expecting recent cost-cutting measures to offset cheap oil prices.

Jordan Hiscott, chief trader at Ayondo Markets, said the oil price is hurting BP’s profitability. “Its share price is down 11 per cent this year, against a rise of 5 per cent on the FTSE 100.”

He warned the oil industry now faces a perfect storm amid the push for cleaner energy and electric cars.

“The likely outcome will be possible dividend cuts, decreased profitability and a reduction in general exploration.”

Guy Stephens, technical investment director at Rowan Dartington, said OPEC production cuts have failed to drive up crude prices.

“The price for a barrel of oil has bounced around $44 to $58 over the last year.

“Some analysts don’t think we will ever see $100 per barrel again.”

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