The union of two of the largest oil companies in the world, ExxonMobil and Chevron, leaves the oil market agitated, says Wall Street Journal

According to a report by The Wall Street Journal last Sunday (31/01), the two largest oil companies in the United States, Chevron and ExxonMobil, discussed the possibility of a merger. The conversations took place in 2020, after the covid-19 pandemic impacted oil prices. FPSO Carioca chartered by Petrobras and operated by Modec arrives this week at the Brasfels shipyard for integration

Read also

• Multinational automobile manufacturer Honda, hires candidates with no experience in its factories for trainee positions
• Multinational Wärtsilä of Finnish origin, is hiring engineers for its base in Rio de Janeiro, today February 15
• Ethanol plant opens recruitment and selection in many primary, secondary, technical and higher education functions

To survive the oil crisis, especially after the perverse effects of covid-19 on the sector, Standard Oil's largest descendants are discussing a merger, reported the Wall Street Journal.

With the union, the new company would have more than 350 billion dollars in market value, with a daily production of 7 million barrels per day. If implemented, the union would result in the second largest oil company in the world, behind only the Saudi state-owned Saudi Aramco.

Demand has dropped dramatically around the world, after the crisis triggered by the coronavirus pandemic, impacting barrel prices. Amid geopolitical disputes, members of the Organization of Petroleum Exporting Countries (OPEC) decided to accelerate production, causing prices to melt: for the first time in history, WTI futures contracts operated in negative territory.

In addition, the renewable energy market has been increasingly competitive against fossil fuels, further aggravating the situation of oil companies.

Although a possible merger between the two American giants may seem like a good way out for those involved, it would face resistance from antitrust bodies around the world, including in the United States.

The idea of ​​the merger sounds like a wake-up call for the global oil industry

If the winds blow against the union between Exxon and Chevron, the idea of ​​the agreement sounds like a wake-up call to the global oil industry. The recovery in demand is not coming as expected, especially given the second wave of covid-19 in the world.

While the global economy is sluggish, the cash of oil companies continues to erode. Above all, companies seek to resume creating value for shareholders. Seven years ago, Exxon was the largest company in the United States, with a market cap of US$ 400 billion. However, a series of misguided strategies gave way to technology companies, the “new economy”, such as Apple, Google and Microsoft.

In 2020, Exxon's shares fell by almost 29%, while Chevron's dropped approximately 20%, even with the price of oil having shown a strong recovery in recent months.