WSJ What’s News - Shell in Early Talks to Acquire BP

Episode Date: June 25, 2025

P.M. Edition for June 25. Talks between Shell and rival BP are in their early stages, according to people familiar with the matter, but a tie-up would be the largest oil deal in a generation. WSJ reporter Ben Dummett discusses what each company would get out of a deal. Plus, Wall Street is panicking after Democratic Socialist Zohran Mamdani won the Democratic primary for New York City mayor. We hear from reporter Kevin Dugan about what Wall Street is worried about. And the war between Israel and Iran has revived China’s interest in a pipeline that would import Russian natural gas. WSJ foreign correspondent Georgi Kantchev weighs in on the geopolitical impact of such a move. Alex Ossola hosts. Sign up for the WSJ's free What's News newsletter.  Learn more about your ad choices. Visit megaphone.fm/adchoices

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Find an agent today at Desjardins.com slash business coverage. Shell is in early talks to acquire BP, a potential landmark combination of two multinational oil giants. Plus, Wall Street is stunned over the upset in the primary election for New York City mayor.

People were expecting Cuomo to win, but it did not feel like very enthusiastic support of Cuomo. When it comes to Mamdani, their concerns are primarily over taxes. And why a cheap summer road trip could change consumers' minds about the economy. It's Wednesday, June 25th. I'm Alex Osceola for The Wall Street Journal. This is the PM edition of What's News, the top headlines and business stories that move the world today.

We're exclusively reporting that Shell is holding early-stage talks to acquire rival BP and what would be the largest oil deal in a generation. That's according to people familiar with the matter. Shell said after the journal reported of the talks that the report, quote, is further market speculation. No talks are taking place. A BP spokesman declined to comment. Reporter Ben Dummett is here to tell us more.

Ben, these are two huge companies. What is the significance of this move? I take your point that both Shell and BP are huge energy producers and they have giant market gaps. But when you compare them with the likes of ExxonMobil and Chevron, they're smaller. And so the combination of these two, both of which are based in the UK, would create this UK energy champion and at the same time give the combined entity the added have to be better positioned to take on the challenge of the so-called super majors like Chevron and Exxon. Katie- What's in it for Shell? Why do this?

Richard- First of all, for Shell to do this, it would be a big challenge. There's a lot of integration, there's complication in terms of bringing together different cultures, application in terms of bringing together different cultures, selling overlapping assets. But that said, it would basically expand Shell's global trading business and it would dominate bolster its dominance in areas such as liquefied natural gas. Analysts and investors have said that the match-up was good for the companies because of their operations in the Gulf of Mexico. And how about BP? What's in it for them?

BP is a smaller entity and it is underperformed Shell for the past several years in terms of its stock market performance. That explains Shell's interest in the sense that timing makes sense because it's in a relatively stronger position to do a deal like this. The same time, BP, because of its relative weakness, that makes it more susceptible to a takeover. That's particularly true when you've got Elliott Investment Management, the well-known active investor that has over a 5% stake in BP, and they're pushing for big changes as

the company. One way of achieving that is to go it alone, and the other way of achieving that is become perhaps part of a bigger entity. Given the sheer size of these companies and their respective market shares, how likely is it that this deal could go through regulators? Well, it would certainly draw the scrutiny of the UK regulators because you are bringing together the country's two biggest energy producers. There's no doubt because these companies have operations globally, it would necessitate review by regulators all over the world, including the US obviously, where they both have big operations. That said, if you look at oil producers like Aramco, for example, in Saudi Arabia, you'd

be hard pressed to argue that they would have any real influence on the oil price long term. So I'm not sure that antitrust issues would be a big deal. At the same time, the UK could look favorably on this type of tie up because you create this national champion and therefore strengthen that entity to ward off possible foreign suitors. That was WSJ reporter Ben Dummett. Thank you so much, Ben. Thanks for having me. I really appreciate it.

A report from the Commerce Department out today showed that sales of U.S. new single-family homes fell 13.7 percent in May from the month before. The numbers, which were below economist expectations, come amid continued concerns over high mortgage costs. U.S. stocks hung near record levels today as the Israel-Iran ceasefire continued to hold. Meanwhile, Federal Reserve Chair Jerome Powell gave his second day of testimony on Capitol Hill. Bets on a July interest rate cut have risen modestly in recent days, after two Fed officials signaled they were open to the possibility. Still, major U.S. indexes ended the day mixed. The Nasdaq was up about.3%,

the Dow dropped a quarter of a percent, and the S&P 500 stayed flat. For many Americans, summer is road trip season. And this summer, people hitting the road might find less pain at the pump than they expected. The average price of a gallon of gas is $3.21 nationally, about 23 cents cheaper this summer than it was last year, thanks to plentiful supply. And as of yesterday, oil prices were lower than before Israel and Iran's conflict began. Reporter Roshan Fernandez says the reduced prices would be a boon for consumers and may boost their confidence in the U.S. economy. Gas prices have a pretty big influence on your

perspective on the economy, just given the fact that people drive a lot. So they see their gas prices pretty regularly at the pump. They see them on the roadside signs. So it's a pretty strong indicator in a lot of people's minds of how well the economy is doing. One good example, a recent survey from the National Association of Convenience Stores showed that just over two-thirds of people would drive five minutes out of their way just to save five cents a gallon on gas. Coming up, why Wall Street is panicking over the prospect of a socialist mayor of New York City. That's after the break. This morning, the world's epicenter of capitalism woke up to find it may soon have a socialist mayor.

Democratic socialist Zoran Mamdani, who up to a few weeks ago was considered a long shot candidate, won the Democratic primary for New York City's mayor over former governor Andrew Cuomo. Kevin Dugan covers the culture of Wall Street at the Journal. Kevin, I'm curious about what Wall Street's reaction was to this win.

On Wall Street, the people who I've been talking to are very surprised at this, but there's some nuance to this. They are also kind of seeing that the Cuomo campaign was based on a feeling of confidence that the former governor was going to kind of take this over. And people underestimated the ground game that Zoran Mamdani brought to New York City in order to win. You mentioned that Wall Street was really backing Cuomo. What kinds of concerns did they have over Mamdani's platform? People were expecting Cuomo to win, but it did not feel like very enthusiastic

support of Cuomo. When it comes to Mamdnie, their concerns are primarily over taxes. He wants to raise taxes on people who are making more than a million a year, as well as some general quality of life issues. Crime in the city, the homeless population, how is he going to deal with that, and how is he going to keep New York City to be a livable place? People are concerned that some of those issues are going to get worse. Given this sort of less than enthusiastic support of Cuomo, were there any sort of pockets of Mamdani support within Wall Street? They're small, definitely the minority.

But you're seeing in the data from the campaign finance board that there were plenty of people who worked at some of Wall Street's biggest banks who were donating to Mom Donnie. Often these were people who were not in financials, although you do occasionally see them. These are typically software engineers, people who work in administrative roles. It kind of speaks to how different Wall Street banks have become where they rely so much on technology, broader services to encompass more of the general population. That was WSJ reporter Kevin Dugan. Thanks, Kevin.

Thank you. President Trump said he doesn't think a nuclear deal with Iran is necessary after the U.S. strikes on three Iranian nuclear sites. Speaking at a press conference at the end of the NATO summit today, he added that there would be talks with Tehran next week and that he would be asking the Iranians for the same thing as before Israel attacked Iran, that Tehran does not develop nuclear weapons. Trump also pushed back on a leaked intelligence report that said the U.S. strikes on Iran's nuclear facilities only set back Tehran's nuclear ambitions by a few months. Defense Secretary Pete Hickseth said the FBI has started a probe into how the preliminary

assessment became public. The war between Israel and Iran has revived China's interest in a pipeline that would import Russian natural gas. That's according to people close to Beijing's decision-making. The countries already do have one pipeline called the Power of Siberia, which opened in 2019. This newer project would be a bigger pipeline that could significantly boost the supply of natural gas

that Russia sends to China. For more, I'm joined now by WSJ foreign correspondent, Georgi Kanchev. Georgi, why does China want to turn to Russia for natural gas? China has ultimately seen that it needs other alternatives. China overall buys around 90 percent of Iran's oil exports. So definitely that war has increased concerns in Beijing

about the reliability of those deliveries. This is definitely a long endeavor, and that's why this pipeline wouldn't be a short-term solution. But China is thinking long-term because there's other reasons why China would need more gas. China is also looking to gas as a bridge fuel between the current exposure to hydrocarbons and the future where you have renewable energy for most of your energy needs. What would the geopolitical impact be of this kind of endeavor? It's really important for Russia because Russia has in the past been the biggest supplier

of gas to Europe after its war in Ukraine. Russia has lost most of that market. So now it wants to redirect that gas. China is a logical place. Also Russia needs the cash to fund its war in Ukraine and reconstituting its army. Such a pipeline is a great, it's going to be a big sign that the China and Russia leadership managed to bind those countries closer together, meaning the alliance is pretty strong.

And from the Chinese perspective, of course, they would get definitely cheaper gas, and they will diversify their deliveries of gas for sure. That was WSJ foreign correspondent, Gyorgy Khenchev. Thanks, Gyorgy. Thank you. And that's what's news for this Wednesday afternoon. Today's show is produced by Anthony Bansi with supervising producer Michael Kosmides. Additional support by Coleman Standifer.

I'm Alex Osala for The Wall Street Journal. We'll be back with a new show tomorrow morning. Thanks for listening.