Shares of Jamaican fuel distribution companies have outpaced the broader market since January, while renewable stocks remain flat amid United States military action in Venezuela and Iran, which sent crude oil prices to their highest levels in years.
At least one market observer however cautions that company-specific growth rather than geopolitics was the primary driver.
The combined market grew 7.9 per cent year to date, its best performance in years. That said, the stock price of Future Energy Source Company Limited, known as FESCO, jumped 63 per cent between January 2 and March 16, climbing from $2.76 to $4.51 per share. Regency Petroleum Company Limited rose 27 per cent over the same period, from $3.83 to $4.87, after touching a year-to-date high of $5.08 on March 6. Both companies are listed on the junior market of the Jamaica Stock Exchange and are engaged in the distribution and marketing of fuels and lubricants. Trading volumes have reflected the heightened interest: more than 4.5 million FESCO shares changed hands on March 16 alone, the busiest session since the start of the year, while RPL saw a spike of over 2.5 million shares traded on January 30.
“In the case of Regency, they have introduced some new products, while in the case of FESCO, they continue to expand with additional locations and new products,” said Gary Peart, CEO of Mayberry Group.”Those are the two main drivers. I don’t think it’s what is happening in Venezuela [or Iran].”
He nonetheless warned that the conflict could weigh on the broader Jamaican economy through inflation.
“Oil prices normally range between US$60 and US$70, so if it remains at US $100 and above, it will affect inflation and the economy,” Peart said.
The backdrop is one of sharply tightening global supply. Brent crude has climbed from around $66 per barrel in early January to some $96 by March 16, while West Texas Intermediate, the US benchmark, rose from $63 to $92.67 after briefly breaching $100 earlier in the month.
The upheaval traces to two military operations. On January 2 and 3, US forces carried out airstrikes across Venezuela and captured President Nicolás Maduro and his wife, Cilia Flores, flying them out of the country. President Trump announced that the United States would control the sale of Venezuela’s oil indefinitely. Venezuela holds the world’s largest proven oil reserves, estimated at some 303 billion barrels.
Then on February 28, the United States and Israel launched surprise airstrikes on multiple sites across Iran, killing Supreme Leader Ali Khamenei and numerous other senior officials. Iran responded with missile and drone strikes against Israel, US military bases and US-allied nations across the region. The conflict is now in its third week. Because all of Jamaica’s motor vehicle fuel and industrial gases are refined from imported crude, sustained prices above US$100 per barrel carry direct downstream consequences for consumers and businesses on the island.
By contrast, shares in two renewable energy companies listed on the JSE’s main market have remained broadly flat throughout the period, a divergence that underscores the sector-specific nature of the rally. MPC Caribbean Clean Energy, a Barbadian investment holding company focused on renewable projects across the Caribbean and Central America, fell 6.4 per cent between January 2 and March 16, from $47 to $43.99, though it briefly plummeted to $32 on January 27 before recovering sharply. Wigton Windfarm Limited, the region’s largest renewable energy company, was the most resilient of the group, declining just 2.4 per cent over the same period.
luke.douglas@gleanerjm.com
