Page 38 - Nigeria one mag 4 edition en

Should oil be invested more?

Despite climate activists' discontent with fossil fuel
investments, demand for this commodity remains
high. Over the last few years, policymakers and climate
change advocates have actively urged Wall Street and
other financial institutions to stop investing in fossil
fuel companies. There have been numerous and
commendable efforts taken to find alternatives to oil
and gas, but throughout the world, these commodities
are in dire need. The ongoing Ukraine/Russia war
highlights the importance of oil and gas in human life.
In this tense geopolitical context, the European energy
crisis serves as a brilliant demonstration of the world's
desperate need for oil and gas.
Additionally, the recent warning from Saudi Aramco
(the largest oil producer) could put things into a new
perspective. Saudi Aramco CEO, Amin Nasser, recently
said at a conference in London: “Today there is a
spare capacity that is extremely low. If China opens up,
the economy starts improving or the aviation industry
starts asking for more jet fuel, you will erode this
spare capacity.” He added “When you erode that
capacity, the world should be worried. There will be no
space for any hiccup, any interruption, any
unforeseen events anywhere around the world.”
Nasser's dire warning should be taken into serious
consideration. Globally, consumers have already been
affected by high oil prices. A direct collateral damage
of the Ukraine/Russia conflict, the current European
energy crisis has devastating economic consequences.
OPEC+'s recent decision to cut oil production by 2 gas station, illustrative image

million barrels per day has already negatively affected operations in more than 70 countries, which
the oil price. Moreover, it has strained Saudi Arabia- operates 10 refineries and sold 64.2 million tons
US relations. President Biden and its western allies of liquefied natural gas last year. Investors have
were blindsided by the alliance’s decision. On CNN, flocked to its NYSE-listed shares, which are up
Biden accused Saudi Arabia of aligning with Russia 13.6% year-to-date.
and threatened consequences, although he did not Chevron (CVX): Another large oil and gas
specify what those consequences would be. These company benefiting from the commodity boom.
events demonstrate the importance of oil and gas in For Q2, the company reported earnings of $11.6
the global economic and political sphere. Additionally, billion, which more than tripled the $3.1 billion in
it underscores the high demand for oil and gas. the same period last year. The company generated
The demand for these commodities currently exceeds $65 billion in sales and operating revenues for the
the supply. quarter, an increase of 81% over last year. The
As an investor, it will be judicious to bet on these three company's board increased the quarterly dividend
oil stocks: by 6% to $1.42 per share in January, giving it a
Shell (SHEL): A multinational energy giant with 3.6% yield on an annual basis.

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