In recent weeks, the stock prices of energy giants Repsol and Shell have faced significant declines. The primary driving factor behind this slump has been the persistent weakness in oil prices. However, this downturn might soon come to an end, as OPEC+ could once again play a crucial role in supporting prices for Brent, WTI, and other key benchmarks.
According to a report by Bloomberg, OPEC+ is close to reaching an agreement to postpone the planned increase in oil production. Citing anonymous delegates, Bloomberg stated on Wednesday that the coalition’s key members would likely not implement the scheduled production boost of 180,000 barrels per day in October.
Under the leadership of Saudi Arabia and Russia, OPEC+ had agreed in June to a roadmap for gradually reversing the production cuts introduced in 2022. These restrictions were implemented to stabilize oil prices, which had been under pressure due to the global economic slowdown.
Oil prices have come under significant strain recently. For the first time this year, WTI prices dropped below $70 per barrel earlier this week. The weakening global economy has dampened demand, with disappointing economic data from both the United States and China further contributing to market concerns. Despite these challenges, market participants have remained cautious in response to recent news, as Brent and WTI have at least stopped their downward slide.
If OPEC+ continues to limit supply, oil prices are expected to rise again, which would certainly benefit Shell and Repsol. Both companies, with their efficient cost structures, are likely to generate substantial profits even if Brent and WTI prices remain lower. While both stocks remain attractive due to their strong dividend yields and undervalued status, the current weak technical charts suggest caution. Repsol’s stock remains secure with a stop-loss order at €11.60, while Shell’s stop-loss can be maintained at €4.60.
This strategic move by OPEC+ could potentially mark a turning point in oil prices, offering a much-needed boost to the energy sector.
