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Why Anglo American and Shell are up today, and Polymetal is down

Business man on stock market crash financial trade indicator background.

Polymetal (LSE: POLY) led the FTSE 100 in morning trading Friday, up 8.5% at one point. That comes after the share price had previously crumbled in the wake of sanctions against Russia. But the big early gains soon evaporated, and Polymetal is edging into the red zone, as I write.

The rise and fall comes against the background of Evraz this week. After Roman Abramovich was added to the UK’s sanctions list, we saw a run on the mining share price. Evraz shares were subsequently suspended.

The fact that Polymetal did not immediately follow downwards, instead gaining in early trading, suggests there was less fear that the stock would follow Evraz than I thought.

It’s largely down to the company’s operations and ownership. Recently, Polymetal said it does not consider itself owned or controlled by Russian interests in the context of new sanctions laws. But Evraz had previously said the same.

My Motley Fool colleague Roland Head has probed Polymetal’s controlling ownership. My only conclusion is that the issue is far from certain, and I think judgment could easily go either way.

It looks like a sobering re-assessment of the danger might well have led to Friday’s about turn. I fear anything could happen in the next few days, or even hours.

Diamond boost

But other mining stocks, notably those without Polymetal’s Russian focus, have been doing well. The Anglo American (LSE: AAL) share price gained 3.8% in morning trading, as one of the Footsie’s early leaders. That adds to a strong rise since December, with the shares now up 39% over the past 12 months.

Diamond sales figures, released this week, appear to be adding to the momentum. The owner of De Beers, Anglo reported a $650m value for its second 2022 sales cycle. That’s fractionally down from a cycle 1 figure of $660m. But it’s significantly ahead of 2021’s cycle 2 sales of $550m.

Estimates vary, but around 30% of world diamond production comes from Russia. With Russian diamond sellers now under sanctions, that can surely only help companies like Anglo American.

Anglo is due to deliver a first-quarter production report on 21 April. I’ll be looking for any trends taking up the slack from suspended Russian sales of various mining commodities, not just diamonds.

Oil price margins

Oil giant Shell (LSE: SHEL) is also moving in the opposite direction to Polymetal. That comes despite the company’s pledge to withdraw from buying Russian oil and gas. So far, it has stopped all spot purchases of Russian crude. And it has closed a number of operations in Russia. Full withdrawal will take longer.

Against the reduction in Russian business though, we have a soaring oil price. It has come down from recent peaks, with countries such as the UAE agreeing to boost supplies to compensate for shortages. But at the time of writing, a barrel of Brent Crude is selling for $109.

In December last year, prices around $75-80 suggested healthy margins for producers like Shell. And the current surge lifts those margins considerably. How long these elevated oil prices will last is anybody’s guess. But for now, they are helping to keep Shell share price momentum going.

The post Why Anglo American and Shell are up today, and Polymetal is down appeared first on The Motley Fool UK.

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Alan Oscroft has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.