Royal Dutch Shell's rumoured takeover bid for BP is not as outlandish as first appears, according to Edmund Shing, global equity portfolio manager at BCS Asset Management.

Since July, the collapse in world oil prices has been the talk of global financial markets. Brent crude oil, the global benchmark, has fallen from $115 per barrel to under $69 today, a price not seen since 2009.

This has been painful for investors holding oil & Gas stocks such as Royal Dutch Shell (RDS) or BP, with Royal Dutch Shell shareholders nursing losses of 10% since June, and BP shareholders an even more painful 15% loss since June.

There have been a number of consequences of this sharp oil price fall, one of which has been an increase in merger & acquisition activity in the global Oil & Gas sector. For instance in Oil Services, Halliburton is in the process of taking over US rival Baker Hughes for $35bn.

But perhaps the biggest potential takeover in this sector is still ahead of us, with talk of Royal Dutch Shell buying BP, despite the fact the British petroleum giant is worth over £136 billion at its current 425p share price.