Shell is reportedly evaluating the acquisition of BP. Recent discussions with advisors have been centered around the feasibility of such a merger, which may hinge on further declines in BP's stock and oil prices. This potential deal comes at a time when BP is facing significant financial difficulties.

BP has seen a noticeable slump in profits over the last year, coupled with a significant drop in share value. Adding to the pressure, activist investor Elliott Investment Management has increased its stake in BP beyond 5%, pushing for more aggressive cost-cutting measures and asset sales. Such financial challenges could make the company an attractive acquisition target but also pose risks for Shell.

Despite these talks, Shell's CEO Wael Sawan appears to favor continuing with share buybacks instead of pursuing BP. In line with this strategy, Shell recently reported strong first-quarter earnings and announced a $3.5 billion share buyback program. The potential merger with BP raises regulatory concerns, given its size and potential impact on market competition, adding another layer of complexity to Shell's decision.