Key Takeaways
- Shell reported Q1 adjusted earnings of $6.92 billion, a significant increase from $3.26 billion in the previous quarter, fueled by $1.93 billion in gains from its oil trading operations.
- Production of oil and gas declined 4% versus Q4 2024 amid the Iran conflict, with LNG facilities in Qatar offline since early March.
- The company increased its dividend by 5% and committed to up to $3 billion in share buybacks — a reduction from the $3.5 billion announced in previous quarters.
- Shell’s American depositary receipts declined approximately 1.9% in premarket sessions, marginally outpacing drops in Chevron and Exxon Mobil.
- Crude oil prices weakened on reports that direct negotiations between the U.S. and Iran may be nearing resumption, pressuring the energy sector broadly.
Shell delivered one of its most impressive quarterly performances in recent periods on Thursday, yet investors responded with caution. The shares retreated in premarket activity as attention shifted to declining production volumes and weakening crude prices.
Shell’s American depositary receipts slipped 1.9% before the market opened. Brent crude is currently trading near $101 per barrel, retreating from highs above $120, as market participants anticipate potential progress in U.S.-Iran diplomatic discussions.
Competitors Chevron and Exxon Mobil also experienced declines, each dropping approximately 3.9% to 4% in premarket sessions as the entire energy sector faced pressure from peace agreement speculation.
Shell’s Q1 adjusted earnings reached $6.92 billion, representing a substantial jump from $3.26 billion in Q4 2024 and surpassing the $5.58 billion recorded in Q1 2025.
The primary contributor was a $1.93 billion gain from the chemicals and products division, which manages Shell’s oil trading operations. The dramatic crude price fluctuations following the outbreak of the Iran conflict have created exceptionally favorable conditions for trading activities.
Prior to the hostilities, Brent crude was trading around $73 per barrel. The closure of the Strait of Hormuz — a critical passage for approximately 20% of global oil and LNG shipments — pushed prices beyond $120 at their peak. Such market volatility presents lucrative opportunities for oil traders.
CEO Wael Sawan described it as “unprecedented disruption in global energy markets” and attributed the robust performance to the company’s operational discipline.
Output Decline Impacts Operations
Despite exceeding earnings expectations, Shell’s oil and gas production decreased 4% from Q4 2024 levels. The company’s LNG operations in Qatar have remained suspended since early March due to the ongoing conflict, while its Pearl GTL installation in Qatar has sustained damage from military strikes.
Shell disclosed last week its plans to acquire Canadian shale operator ARC Resources in a $16.4 billion transaction, which Sawan characterized as a move that would “deliver value for decades to come.” This acquisition expands the company’s upstream portfolio as it navigates the consequences of the Qatar facility shutdowns.
Regarding shareholder returns, Shell implemented a 5% dividend increase — a constructive indicator — though the $3 billion buyback program scheduled for the coming three months represents a decrease from the $3.5 billion authorized in recent quarters.
Shell also experienced improvements in refining margins. Its refining operations, which convert crude oil into gasoline and jet fuel, achieved enhanced returns as constrained supply maintained elevated product pricing.
Broader Industry Developments
Shell is not the only energy company reporting exceptional results. BP more than doubled its quarterly profits in Q1, while Norway’s Equinor recorded $9.77 billion in earnings — its strongest performance in three years.
The profit windfall has attracted criticism from environmental advocacy organizations. Friends of the Earth advocated for an enhanced windfall tax, although the UK’s Energy Profits Levy exclusively applies to North Sea extraction profits. UK operations represent less than 5% of Shell’s worldwide production.
Meanwhile, shipping corporation Maersk reported that the energy price escalation is adding approximately $500 million monthly to its operating expenses, costs being transferred to customers. CEO Vincent Clerc acknowledged the situation generates uncertainty regarding inflation and demand but refrained from making specific forecasts.
Maersk’s US-flagged vessel Alliance Fairfax, which had been stranded in the Gulf since February, successfully navigated through the Strait of Hormuz on Monday under US military protection.
Shell’s Q1 LNG production in Qatar continues to be suspended, with the company providing no specific timeline for when the Pearl GTL facility will return to full operations.
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