How Exxon Stock Would React to Putin’s Decree for Sakhalin-1 Ownership?

American multinational oil and gas producer Exxon Mobil refused to accept the Russian insured tankers. According to Reuters, the decision came in the wake of Western insurance companies refusing to insure the oil tankers. Sakhalin-1 Russian Pacific and Exxon stock prices are likely to get impacted.

Sakhalin-1 is an Exxon Mobil led oil and gas project in the far eastern region of Russia. The project is said to be the US oil company’s biggest investment in Russia. The decision of the company is going to adversely affect the already very less oil production at the site.

The Russian subsidiary of the oil company—Exxon Neftgas—blamed the international sanctions for facing the difficulty in booking tankers.

Already Depleting Russia-Exxon Relations

The relations between Russia and the US oil company were not in good shape ever since the war broke out between Russia and Ukraine. The company has condemned Russian invasion in Ukraine and went on to decrease the oil production from 220K barrels per day to mere 10K barrels per day. It did not entirely stop the production given the energy demand and supply in the region which could face blackout.

Exxon was trying to leave the country since March itself—the reduction in oil production and moving out of staff were some efforts for the same.

On 7th October 2022, Russian President Vladimir Putin reported to sign a decree to establish a new operator for Sakhalin-1 Russian Pacific. The action made the stance of Russia clear towards the actions of Exxon Mobil.

Following the decree, a subsidiary of prominent Russian company Rosneft, Sakhalinmorneftegaz-shelf is expected to take the command over the oil and gas production field currently under Exxon. Moreover they also give a time of one month to foreign investors to ensure their stake in the company.

Potential Impact on Exxon Stock

Nothing could be said clearly about the repercussion of the ongoing tussle between Exxon Mobil and Russia, especially on the Exxon stock price for now. Exxon stock prices are performing well until now since the recent low during mid-July.

During the time, decreasing crude oil prices, steep sell-off and criticism from President Biden drew a negative impact to the company. Following the President’s criticism, there was skepticism of putting windfall tax on the company and it would affect the Exxon stock price. The stock price fell up to 83.4 USD in July.

Exxon Mobil will be releasing its earnings for Q3 2022 by the end of October 2022. Exxon stock is expected to receive a positive impact given the instance. In its Federal filings, the company expected the operating profit to stay around 11 billion USD. The figure is way higher than 6.7 USD about a year ago, less than its Q2 profits of 17.6 billion USD.

Currently the stock price of Exxon is at 100.80 USD.