Can big oil’s bounce-back last?

CALLS FORESGBCGSP the oil business to are growing louder just about everywhere, and not merely from governments and environmentalists. Moody’s, a rating agency, reckons that half of the $1.8trn of global energy debt that it evaluates is held by asset managers and insurers that face increasing pressure on environmental, social and governance () fronts, notably the climate. An annual survey of 250 big institutional investors published on January 6th by the Boston Consulting Group () found that more than four in five think it is important for companies to establish targets for long-term emissions reductions. Nearly as many “feel increased pressure” to apply green filters to their investments.At the same time, the International Energy Agency, a global forecaster, expects worldwide oil consumption to return to its pre-pandemic level of 100m barrels a day (b/d) in 2022. Even if it rose by no more than 1% per year after that, the natural rate of reservoir depletion means that 12m-17m b/d of new supply must be added in the next five years to meet demand, reckons Alastair Syme of Citigroup, a bank. Investors recognise this. As economies reopened last year after the worst ravages of the pandemic and the oil price recovered—this week it is flirting with a seven-year high of $85 a barrel—energy became the best performing sector in the & 500 index of large American firms, ahead of technology and finance. It left environmentally friendly stock picks in the dust (see chart).