Oil stocks, including Exxon Mobil (XOM) - Get Exxon Mobil Corporation Report and Chevron (CVX) - Get Chevron Corporation Report, slumped Friday, as oil prices tanked amid concern about the new Covid variant coursing through the world.
The World Health Organization will hold an emergency meeting Friday following the discovery of the variant, known as B.1.1.529, in a traveler visiting Israel from South Africa earlier this week. It has also been identified in Hong Kong, according to U.K. health officials.
The variant carries a spike protein -- the basis for infection -- that is vastly different from that which current vaccines are designed to neutralize, health authorities said.
And it’s mutating fast. Britain has restricted travel from South Africa, and several neighboring countries as a result, with the European Union following shortly after.
More Covid means less economic growth means less demand for oil.
Exxon recently traded at $60.86, down 4%. It soared 54% year to date through Wednesday, as the economic rebound pushed oil prices higher.
Chevron recently traded at $112.69, down 4%, and jumped 39% year to date through Wednesday.
Morningstar puts fair value at $76 for Exxon.
“While many of its peers have announced intentions to divert investment toward renewables to achieve long-term carbon intensity reduction targets, Exxon remains committed to oil and gas,” Morningstar analyst Allen Good wrote last month.
“While its strategy is unlikely to win praise from environmentally oriented investors, we think it’s likely to prove more successful and, paradoxically, likely holds less risk. The end of oil is likely to occur, but not anytime soon.”