Shell cut its dividend by 66% after warning it was 'prudent' to maintain shareholder payouts due to the global slump in oil prices, and the prospect of economic uncertainty.
Richard Hunter, head of markets at investment service Interactive Investor, said the move would free up $9 billion in the next year: “Shell’s brave decision reflects a desire to hunker down and protect the business in the wake of a worsening global economic outlook and a highly unstable oil price.
“A toxic combination of demand destruction, with aircraft standing idle, vastly reduced travel generally and manufacturing shutdowns, alongside the issue of oversupply, to the extent that even storage of physical oil is becoming more difficult as storage space is increasingly taken, have put the oil majors on red alert.
Coronavirus lockdowns, which has effectively put the world’s largest economies and fuel-dependent industries such as airlines on hold, has caused the demand for crude oil to plummet as storage capacity filled up. Earlier this month, the May contract for West Texas Intermediate, which is a benchmark for U.S. oil prices, slid into negative territory for the first time, while Brent crude, used as a benchmark across the rest of the world, also fell dramatically, although not as badly as WTI.
Meanwhile, OPEC+, a coalition of the world’s biggest oil exporting nations has agreed with Russia to effectively
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