Shares of Shell PLC SHEL rose 1.22% to $66.76 Tuesday morning as tensions in the Middle East continue to escalate following the assassination of Hezbollah leader Hassan Nasrallah by Israeli forces in Beirut. Reports indicate Iran may be planning a ballistic missile attack on Israel in retaliation for an airstrike that killed Hezbollah leader Hassan Nasrallah, prompting the U.S. to increase its military presence in the region.
News of the potential conflict has caused spikes in oil and gold prices, while major stock indexes like the S&P 500 and Dow Jones have dropped in response.
The significant increase in U.S. military presence in the region, including the deployment of fighter squadrons and naval forces, has sparked concerns about potential disruptions to global oil supplies, boosting the price of crude oil and benefiting energy giants like Shell.
What To Know: The Middle East, home to more than 30% of the world's oil production, is a region of immense strategic importance to Shell, one of the world's largest oil and gas companies. Any instability in the region, especially in oil-rich areas such as the Arabian Gulf, can have immediate consequences on oil markets.
Shell's integrated energy portfolio, which spans upstream exploration, production, refining, and trading of oil and natural gas, is closely tied to fluctuations in global oil prices. In times of geopolitical conflict, supply chains are often disrupted, leading to price spikes, which typically bolster the revenues of major oil producers like Shell.
What Else: The heightened U.S. military presence, including aircraft carriers and stealth fighters, signals the possibility of further conflict, especially with concerns about potential retaliation from Iran or Hezbollah.
As the geopolitical situation intensifies, traders and investors are betting on higher oil prices, which often results from fears of disrupted supply lines through critical chokepoints like the Strait of Hormuz—a key artery for the world's oil shipments.
Shell, with its extensive operations in the Middle East, could see both risks and opportunities in such a scenario. Rising oil prices would directly increase profit margins in the company's upstream oil production business.
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Traders and investors can gain exposure to Shell in the Energy Select Sector SPDR Fund XLE.
Is SHEL A Good Stock To Buy?
An investor can make a few decisions when deciding whether a stock is a good buy. In addition to valuation metrics and price action which you can find on Benzinga's quote pages – like Shell‘s page for example – there are factors like whether or not a company pays a dividend or buys a large portion of its stock each quarter.
These are known as capital allocation programs. Shell does pay a dividend, which yields 4.02% per year as of the closing price on Oct. 1, 2024. Feel free to search Benzinga's dividend calendar for the next company that is due to pay a dividend and determine what kind of yield you can earn for holding a share of the company.
For example, if you're looking to earn an annualized return of 13.44%, you'll need to buy a share of Saba Cap Inc & Opps by the Oct. 9, 2024. Once done, you can expect to receive a nominal payout of $0.09 on Oct. 31, 2024.
Buyback programs are obviously different and highly variable. A company can approve a buyback program and purchase shares as it sees fit over the course of time in which the buyback was authorized. Looking through the latest news on Shell will often yield whether or not the company has approved a buyback program recently. Buyback programs usually serve as a support for share prices, serving as a backstop for demand.
According to data from Benzinga Pro, SHEL has a 52-week high of $74.60 and a 52-week low of $60.34.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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