The push towards decarbonization is creating barriers to entry in the oil industry, making major oil players – known as"Big Oils" -- more profitable, Goldman Sachs' head of EMEA Natural Resources Research, told CNBC.
The global trend toward cleaner energy is clearly seen as a long-term headwind for the oil industry but experts like Della Vigna note that demand for oil remains robust, particularly among developing economies. "Big Oils" refer to the world's largest publicly traded oil companies such as Shell, BP, Total, ENI and ExxonMobil . These companies benefit from a limited amount of competition in the industry, or what Goldman characterized as"the restoration of the industry's oligopolistic market structure."
When oil prices slumped from around $114 a barrel to a low of around $26 in early 2016, major oil producing group OPEC decided to cut production in a bid to curb the global oil supply and put a floor under prices. Russia and a group of other non-OPEC producers agreed to also cut output in coordination with OPEC in January 2017. The agreement continues and is expected to carry on through 2019.
Someone always wins but that's OK with me buy a big oil company stock.