Shell is in early-stage discussions to acquire rival oil giant BP in a move that would result in the largest oil industry deal in a generation.

Insiders revealed to The Wall Street Journal that Shell and BP are currently engaged in discussions, although the outcome of a potential deal is uncertain and there is a possibility that it may not materialize.

Shares of BP jumped as much as 10 per cent on the news. 

If the acquisition were to go through, it would represent a significant change in the global energy sector. It would involve the merging of two of the largest energy companies globally, known as ‘supermajors,’ and would enhance Shell’s competitiveness against major industry players like ExxonMobil and Chevron.

BP is valued at around $80 billion, though Shell would likely pay a premium on that. 

That would put the total value near the $83 billion merger that created ExxonMobil in 1999. 

It would be the biggest oil-sector transaction in more than two decades—and the largest corporate deal of the year so far.

Details of the potential offer remain unclear, and the deal is far from certain, sources told the Journal. 

The ongoing talks between Shell and BP are reportedly active but at an initial stage, with BP carefully evaluating the proposed deal. If the acquisition is successful, it would lead to a notable transformation in the worldwide energy industry.

A Shell spokesperson declined to address the potential acquisition directly when speak to the Journal. 

They said: ‘As we have said many times before, we are sharply focused on capturing the value in Shell through continuing to focus on performance, discipline and simplification.’

BP declined to comment to the Journal.

Soon after the Journal’s story broke, people familiar with the matter told CNBC’s Brian Sullivan that it’s unlikely Shell would acquire all of BP. 

Instead, if a deal moves forward, it’s more likely that multiple companies would purchase different parts of BP, according to those familiar with the discussions. 

If completed, the merger would not only reshape the global oil and gas sector but could also have ripple effects for consumers, energy markets, and climate policy. 

The deal comes at a time when geopolitical tensions, including President Trump’s ongoing trade war, continue to inject uncertainty into global markets.

Oil prices spiked after tensions in the Middle East between Israel and Iran. 

BP CEO Murray Auchincloss looks on as he speaks during CERAWeek in Houston, Texas in March

BP is valued at around $80 billion. A potential acquisition of BP would give Shell the opportunity to expand its scale, reduce costs, and strengthen its position against competitors in the global energy market

But they tumbled as tensions eased. US crude dropped 5.4 percent to $64.82 a barrel. Prices have now fallen below where they were before fighting began nearly two weeks ago. 

Concerns had centered on the possibility that Iran — one of the world’s top oil producers — might block the vital Strait of Hormuz, which handles 20 percent of the world’s daily oil shipments.

But Iran’s recent retaliatory strike was limited and did not target oil production or transport. 

If the ceasefire holds, oil prices could fall further amid strong global supply and increased output from OPEC+, said Commerzbank analyst Carsten Fritsch.

If completed, a Shell-BP merger would mark the latest in a wave of consolidation across the energy sector as oil and gas producers seek economies of scale in an increasingly competitive landscape.

Chevron is still working to finalize its $53 billion acquisition of Hess, a deal currently facing legal challenges from rival ExxonMobil. Exxon, meanwhile, completed its own $60 billion purchase of Pioneer Natural Resources last year. Diamondback Energy recently agreed to acquire Endeavor Energy Resources in a $26 billion deal to expand its footprint in the Permian Basin.

The string of megamergers underscores how energy giants are positioning themselves for long-term growth amid geopolitical uncertainty, regulatory scrutiny, and the global transition toward cleaner energy.

This is breaking news. Updates to come.