LONDON — Speculation about a potential Shell acquisition of BP has intensified, prompted by reports from Bloomberg and The Times. Neither Shell nor BP have confirmed or denied these rumors, leaving investors and analysts to assess the likelihood and implications of such a deal. With volatile oil prices and BP’s stock under pressure, the market is closely watching to see if this could be a transformative move for Shell or a distraction from its core strategy.
Bloomberg reported on October 24, 2024, that Shell is exploring a possible bid for BP, citing sources familiar with the matter. The Times confirmed the interest but noted no formal talks have occurred. The rumors have boosted BP’s stock by 3.2% over the past month, closing at £4.15 ($5.36) on May 16, 2025, according to London Stock Exchange data. Shell’s shares declined 1.8% to £26.72 ($34.53), reflecting investor caution.
This is not the first time talks have circulated. In 2004, merger discussions surfaced but failed, according to Reuters. Similar rumors in 2012 also ended without a deal, as reported by The Financial Times. Why has speculation returned with renewed intensity in 2025?
Shell appears to be waiting for the right moment, influenced by low oil prices and BP’s depressed stock price. Brent crude prices have ranged between $70 and $80 per barrel in 2025, down from a 2024 peak of about $92, per ICE Futures Europe. BP’s market capitalization is about £67.8 billion ($87.6 billion), considerably lower than Shell’s £206.4 billion ($266.8 billion), making BP a more affordable target. A weaker British pound and softer energy markets could further influence valuations, according to Yahoo Finance on November 3, 2024.
A deal exceeding $100 billion would face regulatory hurdles. The UK Competition and Markets Authority and EU antitrust bodies would likely scrutinize the merger closely. The review process could delay or block the deal, given concerns about reduced competition and overlapping assets.
Shell’s CEO Wael Sawan has downplayed acquisition rumors. During the Q3 2024 earnings call, he emphasized focus on share buybacks and disciplined capital allocation rather than large mergers (Shell Q3 2024 Earnings Release). Shell repurchased $3.5 billion in shares last quarter and plans the same for Q2 2025. Seeking Alpha reported on December 12, 2024, that Sawan views buybacks as a safer way to increase shareholder value.
BP is facing challenges of its own. Its Q3 2024 profit dropped 30% to $2.1 billion due to lower refining margins, BP’s October 29, 2024 earnings report shows. CEO Murray Auchincloss has pledged to simplify operations and cut costs by $2 billion by 2026. These difficulties could make BP a takeover target, but Shell might hesitate due to operational risks.
Past rumors reflect the oil industry’s cyclical nature. The 2004 talks followed high oil prices encouraging consolidation, while 2012 discussions followed BP’s recovery post-Deepwater Horizon. Today’s rumors coincide with pressures from the energy transition and geopolitical uncertainty. Both companies face demands to invest in renewables while maintaining fossil fuel profits—a challenging balance that a merger could complicate.
Market reactions are mixed. BP’s stock surge suggests investor optimism about a potential takeover premium. Shell’s share decline signals caution. JPMorgan analysts warned on November 10, 2024, that integration costs could reduce Shell’s earnings per share by 5-7% in the near term. Morgan Stanley, meanwhile, suggested on November 15, 2024, that combining Shell’s LNG expertise with BP’s upstream assets could create a $300 billion energy leader.
A Shell-BP merger would reshape the global energy market. The combined entity could control about 10% of global oil and gas production, rivaling ExxonMobil, based on 2024 S&P Global data. Barclays estimates from November 5, 2024, predict $10 billion in annual cost savings from synergies. However, integrating two major competitors amidst market volatility would be challenging.
BP shareholders might benefit from a takeover after years of underperformance. For Shell, the move would be a bet on scale amid a time when agility is crucial. Employees and communities linked to both companies could face disruptions, including job cuts and asset sales typical in large mergers. Stakeholders must weigh short-term gains against long-term risks.
Neither company has indicated immediate plans to negotiate. Shell’s buyback focus suggests capital discipline, but a sharp oil price or BP stock drop could change its stance. Investors should watch Brent crude prices and BP’s Q1 2025 earnings. Regulators will remain key players if discussions progress.
The energy sector faces a crossroads. Consolidation could strengthen giants but risks reducing competition and innovation, vital for the energy transition.
The question remains: Is Shell ready to redefine its future with a major acquisition, or will it stick to a cautious path?
