The fall in oil prices and the prospect of a windfall tax are holding back the oil sector
Eni brings up the rear on the Milan Stock Exchange; the entire European sector is down
(Il Sole 24 Ore Radiocor) - Selling pressure on oil stocks on the Milan Stock Exchange, where share prices are being affected by the fall in crude oil prices and new proposals to tax the so-called ‘extra profits’ made by the sector following the recent surge in oil prices. On the FTSE MIB in Milan, the worst performer is Eni is at the bottom of the table, but Saipem and Tenaris. Oil prices are falling once again on the back of hopes that the new economic sanctions imposed by the United States on Iran may prevent a military escalation in the Middle East and facilitate the normalisation of traffic through the Strait of Hormuz, where Iran and Oman are reportedly negotiating the opening of a shipping corridor. The October WTI futures contract is down 2.56% at $80.25 per barrel, whilst the Brent contract with the same expiry date is down 2.17% at $86.66.
As for fiscal risks, government representatives yesterday reiterated their support for the possibility of a levy on energy groups as part of the forthcoming Budget Bill . Sources at Palazzo Chigi, however, have made it clear that the issue should be addressed at European level. According to the Prime Minister’s Office, in fact, ‘a coordinated approach at European level is the only means of ensuring fairness and competitive neutrality: by ensuring that all oil and energy companies operating within the EU single market contribute equally, we avoid creating commercial discrimination and safeguard the competitiveness of the national industrial system’.
“Although details are limited, we view the news as an increase in regulatory risk for the Italian energy sector,” comment analysts at Banca Akros, noting that “integrated oil and gas companies appear to be the most directly exposed should taxation focus on profits generated by exceptionally high commodity prices”. In particular, the experts conclude, “Eni would appear to be the company most directly exposed amongst those we cover, although any assessment remains premature pending further details on the structure and scope of the measure”. The sell-off on the stock market, in any case, is affecting the entire European sector: the Stoxx sub-index for the sector is posting the worst performance of the day. In the red are Repsol in Madrid, TotalEnergies in Paris, as well as BP and Shell in London.
