I remember the shockwaves that the Brexit decision sent throughout the world last summer. It was very reminiscent to the night Donald Trump got elected, and like Mr. Trump’s election, the economic effects of the event were pretty immediate.
We know what happened in the days and months after, but what about what happened to the oil and gas industry in Britain? It turns out there were a few effects.
Following Brexit, the American S&P 500 fell by -3.6%, and the price of crude oil fell by -4.8%. Not only that, but major oil producers such as Occidental Petroleum and Devon Energy fell in value by -3.9% and -7.6% respectively.
These are great facts, but they’re values based on the subjective perspectives of those on the stock market. It wasn’t like upstream and downstream operations suddenly ran into a wall for Occidental Petroleum and Devon Energy–they were the same companies. The only thing that changed were people’s interpretation of their short-term chances in the market.
The problem with “Brexit” was that it was just a vote. The UK won’t formally leave the EU until March of 2019. In two months they’ll formally start that process.
So, how are companies like Occidental Petroleum and Devon Energy doing now? Devon Energy rebounded almost immediately and is now surging in stock price. Occidental Petroleum rebounded, but their stock price is down as a whole by a slight margin since.
Brexit really won’t have that much effect on the oil industry of the UK. That’s because they’ve always been in control of their own oil destiny anyway. The real effects of Brexit will be felt in other, larger, ways.