BP seems like a sound investment because oil companies are set to report very high earnings in Q3 (Bloomberg and WSJ). Additionally, the high price of energy is not seeming to hurt the profits of these companies (actually boosting their profits), and raising the share price higher. There is risk of state intervention given the impending Climate Crisis, but big oil seems like a safe-haven for investors in this macro environment.

Big oil continues to outperform the market and BP, as one of the largest energy producers in the world, is poised to benefit from the current macroeconomic environment. They have a large EM exposure and have key partnerships in multiple emerging markets (Jio-BP in India, prumo logistica-BP in Brazil) that enhances their local operations. Additionally, they are the leaders (along with Shell) in investments in renewable energy, and recently acquired an American biogas producer Archaea Energy, indicating their commitment to meeting their sustainability initiatives and benefiting from shifting energy trends.

BP Buys Renewable Natural-Gas Company in $4.1 Billion Deal

British petroleum is producing fossil fuels which is against the environmental megatrend, where green values are appreciated. This is the reason why we are opening a short position on British Petroleum.