When international oil prices soar, who is the biggest winner? Naturally, it’s the oil giants.
According to statistics, in the fourth quarter of last year, the profits of the five major oil giants including BP, Shell, Total, ExxonMobil, and Chevron surged, exceeding market expectations. The total adjusted profits reached US$31 billion (approximately 197.1 billion yuan). RMB), a 9-year high; at the same time, free cash flow also totaled US$37 billion (approximately 235.3 billion RMB), the highest level since the first quarter of 2008.
At that time, the five giants had free cash flow of US$40 billion, while the average price of Brent crude oil was US$96 per barrel, almost breaking the US$100 mark. However, the average price of Brent crude oil in Q4 last year was around US$80, which means that the profits of the oil giants last year were even better than in 2008. If the oil price continues to sprint to US$100 this year, it will be the “icing on the cake” for them.
This is not impossible. Bank of America believes that by the middle of this year, international oil prices will break through the US$120/barrel mark. Even JPMorgan Chase has said that it does not have to wait that long, as long as the confrontation between Russia and Ukraine escalates. , oil prices can soar directly to US$150/barrel.
But don’t look at the huge profits these five giants are making now. Not long ago, they were still in a trough. With the outbreak of the COVID-19 epidemic in 2020, oil prices plummeted, and “negative oil prices” emerged. This year, the five giants suffered a total loss of US$19 billion (approximately 120.8 billion yuan).
Fortunately, the sun always shines after the storm. During the period of high oil prices, the five giants finally made up for their previous financial holes and experienced the excitement of “riding a vertical roller coaster” in just two years.
Regarding the prospects of the oil market this year, giants such as BP and Total are optimistic. They believe that over the years, everyone has been rushing to transform into clean energy and has underinvested. While oil demand continues to be strong, supply and demand are out of balance, and oil prices will only remain high. .
Different from the complacent appearance of the oil giants, Biden is worried about high oil prices. In order to “kill oil prices,” he has repeatedly pressured OPEC+ to significantly increase production, and also roped in Japan, India, and the United Kingdom to release strategic oil reserves, and even He also directly blamed the US oil giants for driving up oil prices and asked relevant agencies to investigate the illegal business practices of energy companies manipulating oil prices.
Even so, international oil prices did not fall like a slide as Biden expected. After all, he did not really want to “kill oil prices”, he was just trying to save face and win more votes.
As oil prices rise, U.S. inflation will inevitably rise. In January this year, the country’s CPI surged 7.5% year-on-year, hitting a 40-year high. This is embarrassing. Biden is unable to deliver, and his approval rating has been declining. But he Still insisting, don’t worry, U.S. inflation is bound to ease significantly within this year, and he will go all out to win this tough battle.
It should be mentioned that the U.S. CPI is terrible, and the Federal Reserve is still printing money to buy bonds. In February, it will increase its holdings of U.S. bonds by at least $20 billion and MBS by $10 billion. It is reported that after the outbreak of the epidemic, the Federal Reserve took action to purchase US$120 billion in treasury bonds every month. However, the money printing was too fierce and inflation exploded. Since November last year, the Federal Reserve has restrained and reduced the scale of bond purchases. However, the bond purchases will not take place until March. It will end completely at the beginning of the month.
BlackRock, JPMorgan Chase, Morgan Stanley, Wells Fargo and many other investment banks couldn’t stand it any longer. They said it was outrageous that the U.S. inflation was already like this and the Federal Reserve was still buying bonds. They all urged them to “quit” QE immediately. .
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