BP and Shell shares sink to 25-year low

Shares in Britain's two biggest oil companies slumped to 25-year lows on Thursday after Brent crude dropped back below $40 a barrel for the first time in nearly a month.

BP ended the day 3.1pc lower at 218.2p, capping off a 20pc decline over the past two months after it revealed a long-term strategy to ween itself off oil and go green, after slashing 10,000 jobs in a desperate bid to save cash.

Shell similarly fell to a 25-year low on Thursday, just a day after announcing a sweeping reorganisation of the company, and upwards of 9,000 redundancies.

Oil firms have been hammered by coronavirus, which sent demand plummeting as terrified drivers, commuters and holidaymakers around the world stayed at home.

Brent has fallen from almost $70 at the start of the year, while the US oil benchmark briefly went negative in a historic plunge as the crisis took hold and demand fell so sharply that storage sites for excess oil started to fill up.

The long-term shift to clean power is also casting a shadow over companies which depend for their profits on fossil fuels.

BP has pledged to cut its oil production by 40pc and increase its annual investment in renewable and clean technologies to $5bn (£3.9bn) a year. The company's stock has lost half of its value since the start of 2020.

Meanwhile, Shell's B shares closed at 907.3p - their lowest level since November 1995 - and it is now down 59pc this year, compared with a 22pc decline for the FTSE 100. That was slightly worse than the 54pc slide for BP.

Shell was forced to cut its dividend for the first time since the Second World War in May.

As the northern hemisphere moves in to the autumn with rising rates of infection in many places, oil demand is likely to be hit hard as international travel slows once again.

Europe's oil giants are struggling to convince investors that their pivot to clean energy can be as profitable as selling crude, while attempting to deflect growing anger from activists and a heavier hand from regulators.

Leaders at BP and Shell have said publicly that plans to move toward renewable energy have been accelerated by the unprecedented blow dealt by coronavirus and the halting of heavy industry and international travel.