Thursday, June 10, 2010

Oil spill: BP shares plummet 11% on Obama fears

Beachgoers walk past a bottle coated with oil from the Deepwater  Horizon oil spill in Pensacola Beach, Florida June 4, 2010. REUTERS/Lee  Celano

Shares in BP have plummeted another 11% in early London trading, amid fears President Obama will impose massive punitive penalties on the company.

It means the oil giant's share price has almost halved since the Deepwater Horizon oil spill began on 20 April.

BP's share price of 348.6 pence is below the lows of the financial crisis, at its lowest level since 1997.

Market attention is increasingly focused on the threat to BP posed by the political fall-out in the US.

In his latest comments, President Obama suggested that the oil company should pay unemployment benefits to thousands of oil workers laid off during a moratorium on deep-sea drilling triggered by the spill.

Further congressional hearings into the Gulf of Mexico oil leak are planned on Thursday.

The sharp fall in BP's share price is bad news for UK pension funds, which invest heavily in the firm.

The oil company has said that it pays £1 in every £7 of dividends that the pension funds receive from FTSE 100 companies.

BP responded to the sharp price fall in the US, stating that, "the company is not aware of any reason which justifies this share price movement".

Market nerves were also reflected in the value of BP's bonds, which now trade at levels comparable with junk-rated companies.

This is despite the company continuing to enjoy high "investment grade" ratings from all three major ratings agencies.

Wednesday's losses followed BP shares sliding 5% on Tuesday after US President Barack Obama said he would have fired chief executive Tony Hayward over remarks he made.

Mr Hayward made comments such as "I want my life back" and called the Gulf "a big ocean" in the wake of the disaster, which killed 11 people.


No comments:

Post a Comment