After OPEC’s decision to ease record supply curbs last week, we decided to do a short overview of how the rising oil prices impacted the share price performance of major oil integrated companies, as well as those doing downstream alone (refineries).

Last week OPEC decided to ease record supply curbs which prompted many investors to fear a new drop in oil prices as the global economy is still not recovered from the global pandemic. As a reminder, OPEC+ agreed last week to scale back oil production cuts from August. The organization will reduce their cuts to 7.7m barrels per day through December from the 9.7m bpd cuts in place since May.

Oil Prices (USD per barrel)

The chart shows that the share price of integrated oil companies started to rise at the begging of 2017, along with the slowly rising oil prices. This comes as no surprise when taking into account that in their case oil prices represent the prices of outputs, while the impact on input price is only partial to none, causing the companies’ expected profitability to go up. Meanwhile as oil prices started to deteriorate in 2019 and then culminated with the collapse in 2020, due to the COVID-19 pandemic, so did the share prices of oil companies.

However, when looking at individual company performance, one can notice that the Finnish Neste Oil is close to regaining their pre COVID-19 share price. When looking at the region, Petrol seems to be the fastest recovering oil company. This could be attributed to the fact that they operate as a retail company, rather than an integrated up and downstream oil company, thus benefiting from the recent rise in oil prices.

Share price Performance of Oil Companies