Why the BHP (ASX:BHP) share price has surged 3% this week

The Aussie iron ore giant shares are closing in on a new all-time high.

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It’s been a good week for the BHP Group Ltd (ASX: BHP) share price. Shares in the Aussie mining giant are up 3.4% since Friday’s close, translating to a $149.4 billion market capitalisation.

Here’s why shares in the iron ore miner are enjoying solid gains at the moment.

Why the BHP share price has surged higher this week

In good news for shareholders, the Aussie mining share continues to hover just shy of its $51.82 per share record high.

The most recent run started on Monday as the BHP share price rocketed higher to start the week. Pleasingly for shareholders, those gains have largely been maintained including a 0.5% gain on Thursday.

One key regulatory change from China’s central bank has been a factor boosting BHP’s fortunes in recent days. As noted in the Australian Financial Review on Monday, the People’s Bank of China announced a change in bank reserve requirements which could free up hundreds of billions of additional liquidity in the Chinese economy.

That helped spark share price rallies in global markets last Friday with resources shares being particular winners. The BHP share price, alongside fellow iron ore giants Fortescue Metals Group Limited (ASX: FMG) and Rio Tinto Ltd (ASX: RIO), followed suit and surged when markets reopened on Monday.

Crude oil prices have also been climbing, aided by declining inventories and increasing tensions amongst the OPEC oil cartel. Both Brent and WTI crude prices climbed higher and sparked a surge in BHP shares on Monday. According to its 2020 annual report, BHP generated US$4.1 billion or 9.5% of its revenue from petroleum in FY2020.

That means the company has exposure to climbing commodity prices through potentially higher realised sale prices in significant volumes.

The BHP share price is sitting just 1.7% from its all-time high. That’s not bad for an S&P/ASX 200 Index (ASX: XJO) share hit hard in the March 2020 bear market.

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Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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