Key Takeaways
- Shell delivered Q1 adjusted earnings of $6.92 billion, a significant increase from $3.26 billion in the previous quarter, with $1.93 billion coming from oil trading operations.
- Production of oil and gas declined 4% versus Q4 2024, affected by Middle East tensions, with LNG facilities in Qatar remaining offline since early March.
- The company increased its dividend by 5% while setting a share buyback program of up to $3 billion, compared to $3.5 billion in prior quarters.
- American depositary receipts for Shell decreased approximately 1.9% during premarket hours, performing slightly worse than competitors Chevron and Exxon Mobil.
- Crude prices weakened amid market speculation about potential resumption of direct diplomatic talks between the U.S. and Iran, affecting energy sector sentiment.
Shell delivered its most impressive quarterly performance in quite some time on Thursday, yet the market response remained muted. Shares declined during premarket hours as investors directed attention toward reduced production levels and weakening crude prices.
American depositary receipts for Shell dropped 1.9% before the opening bell. Brent crude currently trades near $101 per barrel, having retreated from peaks above $120, while market participants increasingly anticipate the potential restart of diplomatic engagement between Washington and Tehran.
Competitors Chevron and Exxon Mobil also experienced declines, falling roughly 3.9% to 4% in premarket activity as energy stocks broadly retreated on expectations surrounding possible peace negotiations.
Shell’s adjusted earnings for the first quarter 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 catalyst came from the chemicals and products division, which includes Shell’s oil trading operations, generating $1.93 billion in profit. The dramatic price fluctuations in crude markets following the outbreak of conflict involving Iran have provided lucrative opportunities for trading desks.
Prior to hostilities, Brent crude traded around $73 per barrel. The disruption at the Strait of Hormuz — a critical chokepoint handling approximately 20% of global oil and LNG shipments — propelled prices beyond $120 at certain points. These substantial price swings create profitable conditions for commodity traders.
Chief Executive Wael Sawan characterized the situation as “unprecedented disruption in global energy markets” and highlighted the company’s operational discipline as key to the robust performance.
Output Levels Decline
Despite exceeding earnings expectations, Shell’s oil and gas production decreased 4% relative to the fourth quarter of 2024. The company’s LNG operations in Qatar have remained shut down since early March owing to the regional conflict, while its Pearl GTL facility in Qatar has sustained damage from military actions.
The company announced the previous week its plan to acquire Canadian shale operator ARC Resources in a $16.4 billion transaction, which Sawan indicated would “deliver value for decades to come.” This acquisition expands the company’s upstream portfolio while navigating the challenges posed by the Qatar facility closures.
Regarding capital allocation, Shell implemented a 5% dividend increase — a constructive development — though the $3 billion share repurchase program planned for the upcoming three months represents a reduction from the $3.5 billion authorized in previous quarters.
Shell also captured advantages from elevated refining margins. Its refining operations, which convert crude oil into gasoline and aviation fuel, achieved stronger returns as constrained supply maintained elevated product pricing.
Broader Industry Trends
Shell stands among several energy companies reporting exceptional results. BP more than doubled its quarterly profits, while Norway’s Equinor recorded $9.77 billion in earnings — marking its strongest quarterly performance in three years.
The substantial profit generation has attracted scrutiny from environmental advocacy organizations. Friends of the Earth advocated for enhanced windfall taxation, although the UK’s Energy Profits Levy applies exclusively to North Sea extraction revenues. UK operations represent less than 5% of Shell’s worldwide production.
Meanwhile, maritime transportation leader Maersk indicated that elevated energy costs are adding approximately $500 million monthly to its operating expenses, costs being transferred to customers. CEO Vincent Clerc noted the situation generates ambiguity regarding inflation and demand trends while avoiding specific forecasts.
Maersk’s US-registered vessel Alliance Fairfax, which had been stuck in the Gulf region since February, successfully transited the Strait of Hormuz on Monday under US military protection.
Shell’s LNG production capabilities in Qatar continue to remain non-operational, with the company providing no specific timeline for resuming activities at the Pearl GTL facility.
