LONDON Ã¢â‚¬â€ BP shares slumped on Wednesday as investors feared that intense political pressure from Washington over the Gulf of Mexico oil spill could force the group to axe its prized shareholder dividend.
The share price sank by 4.24 percent to close at 391.55 pence, having earlier touched a low point of 380.50, as the company was plagued by concern about the financial impact of the worst oil spill in US history.
London’s FTSE 100 index of leading shares meanwhile finished 1.15 percent higher at 5,085.86 points.
The group’s market value has plunged by billions of dollars since the Deepwater Horizon oil rig, operated by BP and owned by US contractor Transocean, sank on April 22 — two days after an explosion killed 11 workers.
Shares have now collapsed by around 40 percent since the accident, which sparked an enormous oil spill from a leaking well head on the ocean floor.
“There remains an intense amount of uncertainty over future dividend payments to shareholders, with senior politicians in the US applying strong pressure to delay any payment until legal and clean up costs have been covered,” City Index analyst Joshua Raymond told AFP.
“Moreover, with President Barack Obama’s public outburst at BP — ie to kick ass — and the fact that there are important congressional elections ahead in November, there is a fear that BP could be used as a scapegoat to garner political support.
“This is making the outlook rather uncertain and when there is uncertainty, investors tend to flee.”
Seymour Pierce analyst Alan Sinclair argued that investors were not taking a “rational” view of the disaster’s overall impact.
“As far as the share price is concerned, the situation — inflamed by ill-informed comments from ignorant US politicians and assorted commentators – has now descended into farce,” he said.
The US President had warned BP late last week that BP must not short-change Gulf of Mexico disaster victims if it pays billions of dollars in share dividends.
Obama also said that he was looking for some “ass to kick” as recriminations mount and the oil spill wreaks havoc on the fragile Gulf coastline.
The President added Tuesday that he would have sacked BP Chief Executive Tony Hayward for flippant comments made about the impact of the disaster.
Hayward had previously said that the spill — the greatest environmental calamity in US history — would be “very, very modest” and described it as relatively “tiny.”
“He wouldn’t be working for me after making any of those statements,” Obama had said on the NBC “Today Show” on Tuesday.
But the BP boss had insisted over the weekend that he was determined to see the crisis “through to the end.”
Hayward will be grilled over the oil spill crisis by US senators at a congressional hearing next week, on June 17, almost two months after the deadly explosion.
The BP chief insisted Wednesday that the group was “throwing everything” at helping fix the US oil spill disaster and was “determined” to stop the flow of oil and minimise environmental damage.
BP’s shareholder dividend accounts for around one pound in every seven pounds of annual shareholder payouts in Britain.
Thus far, BP has refused to comment on the future of the dividend, while the board is expected to make a decision in late July.