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How the coronavirus and oil-price war have affected the Shell share-price forecast

By Connor Freitas

The coronavirus pandemic and the oil-price war between Russia and Saudi Arabia is weighing heavily on the Shell share-price forecast

The share price forecast has been thrown into disarray of late – and given this company is an oil giant, it isn’t hard to see why. The value of Royal Dutch Shell shares had been consistently in the 2,200p range on the London Stock Exchange until fairly recently, when the fallout from the coronavirus pandemic started to become clear.

When the Chinese economy effectively came to a standstill in order to halt the spread of Covid-19, energy executives in the country were predicting that oil consumption would fall by 25 per cent. This drastic reduction in appetite has now been replicated worldwide as countries implement their own lockdown measures. Even airlines, one of the most avid consumers of oil, have been cutting back as planes are grounded and international travel is paralysed.

If all this wasn’t enough, the Royal Dutch Shell share-price forecast has been affected by the badly timed oil-price war that’s erupted between Russia and Saudi Arabia. Combined, these factors saw oil prices tumble by as much as a third on March 9 – the biggest one-day decline since the Gulf War of 1991. Analysts recently said that this slump will be short-lived, unless the virus sparks a new recession.

Here, we’re going to take a look at the latest Shell share-price prediction, as well as what the company is doing to weather the storm.

Royal Dutch Shell news

As executives try to steady the ship, Royal Dutch Shell news is coming in thick and fast. The company recently announced that it intends to free up $8bn or $9bn in cashflow – and this will be achieved by slashing capital expenditure, abandoning a planned share buyback programme, and streamlining operating costs.

Ben van Beurden, Shell’s chief executive, has continued to strike an optimistic tone despite the desperate circumstances – and said protecting the financial strength and resilience of the business, as well as keeping staff safe, was his top priority. He added: “The combination of steeply falling oil demand and rapidly increasing supply may be unique, but Shell has weathered market volatility many times in the past.”

This hasn’t stopped analysts, such as those at JPMorgan, warning that the current market turmoil means Royal Dutch Shell is more vulnerable than other giants in the oil sector.

Shell share price forecast

Let’s take a look at the Shell share price today, as well as what’s happened over the past month or so.

Back on March 2 they were trading at 1,716p – or £17.16 per share if you prefer. The share price has gradually been declining since January, about 25 per cent off highs seen at the start of the year. Royal Dutch Shell stock analysis shows that they hit a 52-week low of 970p on March 18. That’s a 43.4 per cent fall in the space of just two weeks.

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Any Shell share-price forecast should take into account that there has been a healthy recovery from March 19 to 25. At the time of writing, it has bounced back to 1,457p – a rise of 50 per cent over the course of a week. It is worth bearing in mind that Shell, and oil giants like it, are not out of the woods yet. Some nations, such as the United Kingdom, are still in the very early stages of the coronavirus outbreak – and a recession could weigh heavily on Royal Dutch Shell’s performance.

According to the FT, analysts appear to be largely optimistic. Of 15 analysts providing price targets over the coming 12 months, the median forecast is 1,848p – and this would be a gain of 23.2 per cent. A high-end forecast of 3,091p would be a 106.4 per cent upside for the stock, while the worst-case scenario suggests that a 21.7 per cent decline from the current price to 1,172p is possible.

Given this Shell stock-price forecast, traders around the world will be weighing up whether or not the oil giant is at a good price now – or whether shares could become cheaper in the not-too-distant future. The coronavirus and the latest price war are going to remain real and present risks for some time yet.

Royal Dutch Shell shares: buy or sell?

Platforms such as our own, Currency.com, provide tokenised shares – including those for oil giants such as Shell. This allows traders to use crypto as collateral and gain exposure to global markets using major assets such as Bitcoin. Performing in-depth technical analysis will be crucial to making the right decision – as well as subscribing to price alerts and seeking an array of opinions at this volatile time.

FURTHER READING: Oil prices continue to fall as shutdown hits demand

FURTHER READING: How to invest in oil with little money

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