Key Takeaways
- Shell delivered Q1 adjusted earnings of $6.92 billion, a significant jump from $3.26 billion the previous quarter, largely fueled by $1.93 billion in profits from oil trading operations.
- Production of oil and gas declined 4% versus Q4 2024 amid the Iran conflict, with Qatar LNG facilities offline since early March.
- The company increased its dividend by 5% and authorized share repurchases of up to $3 billion — a reduction from the $3.5 billion levels seen in prior quarters.
- Shell’s American depositary receipts dropped approximately 1.9% in premarket activity, falling slightly more than competitors Chevron and Exxon Mobil.
- Crude prices weakened on reports that direct diplomatic talks between the U.S. and Iran could soon restart, pressuring the entire energy sector.
Shell delivered impressive first-quarter results on Thursday, marking one of its most profitable periods in recent years. However, investors responded with selling pressure as concerns over declining production volumes and weakening crude prices took center stage.
Shares of Shell’s American depositary receipts slid 1.9% during premarket hours. Brent crude is currently trading near $101 per barrel, retreating from highs above $120, as market participants anticipate potential resumption of diplomatic dialogue between the United States and Iran.
Competitors in the energy space also faced pressure, with Chevron and Exxon Mobil each declining between 3.9% and 4% in premarket trading as the sector reacted to optimism surrounding potential peace negotiations.
Shell reported Q1 adjusted earnings of $6.92 billion, representing a substantial increase from the $3.26 billion recorded in Q4 2024 and surpassing the $5.58 billion figure from Q1 2025.
The primary contributor to this earnings strength was the chemicals and products segment, which generated $1.93 billion in profit. This division includes Shell’s oil trading operations, which have thrived amid significant crude price volatility following the outbreak of the Iran conflict.
Prior to the conflict, Brent crude traded around $73 per barrel. The disruption to the Strait of Hormuz — responsible for transporting approximately 20% of global oil and LNG volumes — drove prices beyond $120 at their peak. Such dramatic price swings create lucrative opportunities for commodity traders.
Chief Executive Wael Sawan described the situation as representing “unprecedented disruption in global energy markets” while highlighting the company’s operational resilience in navigating the challenges.
Output Decline Raises Concerns
While earnings exceeded expectations, Shell’s hydrocarbon production volumes fell 4% compared to the fourth quarter of 2024. The company’s LNG operations in Qatar have remained shut down since early March due to ongoing conflict, and its Pearl gas-to-liquids facility in Qatar has sustained damage from military strikes.
Shell revealed last week its intention to purchase Canadian shale operator ARC Resources in a $16.4 billion transaction, which Sawan characterized as an investment that will “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 capital allocation, Shell increased its dividend by 5% — viewed as a constructive move — though the $3 billion share buyback program scheduled for the coming three months represents a decrease from the $3.5 billion levels maintained in recent quarters.
Shell also benefited from stronger refining economics. Its downstream operations, which convert crude oil into gasoline and aviation fuel, experienced enhanced profitability as constrained supply maintained elevated product valuations.
Broader Industry Trends
Shell is not the only major energy company reporting exceptional results. BP more than doubled its quarterly profits in Q1, while Norway’s Equinor delivered $9.77 billion in earnings — its strongest performance in three years.
The substantial profit increases have attracted criticism from environmental advocacy organizations. Friends of the Earth has called for an expanded windfall tax, although the UK’s Energy Profits Levy applies exclusively to earnings from North Sea operations. UK production represents less than 5% of Shell’s worldwide output.
Meanwhile, global shipping leader Maersk indicated the energy price surge is adding approximately $500 million monthly to its operating expenses, costs which are being transferred to customers. CEO Vincent Clerc noted the situation creates ambiguity regarding inflation and demand trajectories but declined to offer specific forecasts.
Maersk’s American-flagged vessel Alliance Fairfax, which had been stranded in the Gulf region since February, successfully navigated through the Strait of Hormuz on Monday under U.S. military protection.
Shell’s Q1 LNG production facilities in Qatar continue to remain non-operational, with the company providing no definitive timeline for when activities at the Pearl GTL location will restart.
