Oil company shares have sunk today after the Brent crude price sunk below $34 a barrel, as the market absorbs news of President Trump’s travel ban.
Shares in BP have fallen 11.18 per cent to 280p and those of Shell are also down 11.15 per cent at 1,165p.
Tullow oil and TransGlobe Energy released results today with significant losses and share price falls.
“The combination of coronavirus and an oil war is weighing heavily on oil prices, with investors not betting on a quick resolution to the dispute between Russia and Saudi Arabia,” said Carlo Alberto De Case, chief analyst at ActivTrades.
The UAE has announced it will increase oil production, further adding to the international over-supply which is dragging oil prices down.
Brent crude prices are currently at $33.30 a barrel, down seven per cent on the day.
French oil giant Total shares also fell 11 per cent while Premier Oil’s shares dropped 38.35 per cent to 14.16p.
President Trump said early this morning banning travel from 26 European countries in the Schengen free travel zone.
The UK is not affected and there are some exemptions for US citizens but analysts predicted the move would hit suffering airlines further.
“The most direct effect will be on jet fuel demand, with trade group Airlines for America saying the measure would hit the US airline industry “extremely hard”, said Jack Allardyce, oil and gas analyst at Cantor Fitzgerald Europe.
“While it is impossible to quantify the potential impct on demand for crude and its products, jet fuel represented eight per cent of overall US petroleum consumption in 2018, while wider transportation made up almost 70 per cent,” he added.
The US consumes almost a fifth of the world’s oil.
The Trump travel ban makes a bad situation worse for European airlines as well, with British Airways owner IAG and Norwegian Air Shuttle shares sinking further today.
British airways, Ryanair, Lufthansa and Qantas have all cancelled flights.