The oil majors in the turmoil:
First of all, we can of course point out the results published by the oil majors, which have fallen sharply for 2020. BP, Total, Chevron, ExxonMobil, and Shell have indeed accumulated losses of nearly $80 billion for profits of $50 billion in 2019 on health crisis funds. In April, world demand fell by 30 million barrels and the year 2021 is unlikely to see a return to previous levels.
But in addition to the health crisis, the role of hydrocarbons is changing with the energy and ecological transition that is also weighing on these oil giants.
This is why the European groups BP, Shell and Total have committed themselves to carbon neutrality by 2050 and will have to prove themselves credible in this direction. These groups are also tending to diversify into renewable energies with recent major investments in this area.
The American companies Exxon and Chevron are waiting for the recovery to revitalize their production in the Texas and New Mexico fields. Unfortunately for them, the new US presidency is no longer really favourable to them since Joe Biden has committed himself to a different field than Trump by reintegrating the Paris Agreement on Climate Change.
Biden's other decisions affecting oil:
In addition to this decision, the U.S. government is expected to commit $2 trillion over 10 years to accelerate the deployment of renewables, support public transport, renovating homes and with the goal of decarbonizing the electricity system by 2035 and the entire economy by 2050 like the rest of Europe.
However, the new president is limited to directly constrain the activity of the oil majors as this would increase imports and rekindle the fear of a dependency that has been ruled out since the oil and shale gas boom. Moreover, the government only controls exploitation on federal lands. The oil industry remains the source of more than 10 million well-paying jobs. Although this will be offset by significant job creation in the green energy sector, Joe Biden has every interest in not disappointing his electorate on the employment front.
We will now have to monitor the market to see if, in the coming months, the position of the American oil majors remains the same or changes as it has in the rest of the world.