Shell told investors it expects "significantly higher" trading and marketing earnings for the first quarter after crude and product volatility tied to the Iran war pushed global oil from about $61 a barrel in January to near $119 by the end of March. The company also warned integrated gas output will fall to 880,000-920,000 barrels of oil equivalent per day, down from 948,000 in the fourth quarter of 2025, citing strikes and damage to Gulf energy infrastructure. Shell said LNG liquefaction volumes will be roughly 7.6-8.0 million tonnes, broadly in line with the prior quarter, and that full first-quarter results will be published on May 7. The update highlights how rapid price swings and regional outages have handed traders windfalls even as physical output suffers.

Shell attributed the uplift in first-quarter profit expectations largely to its chemicals and products trading desk, which covers oil trading, marketing adjusted earnings and the trading and optimisation result. The company said those items will be significantly higher than comparable recent periods, a consequence of extreme price moves and larger mark-to-market gains for trading books.

Trading windfall

Crude benchmarks, the company noted, surged through late February and March. Shell pointed to markets where Brent briefly traded near $120 a barrel, and to an average price level for the quarter that was materially above fourth-quarter figures. Those moves amplified trading opportunities for majors across the sector, and Shell said indicative refining margins rose to around $17 per barrel from $14, lifting refining-related cash flows.

Shell also linked part of the trading upside to damage sustained at Gulf facilities. The company said strikes linked to the Iran war damaged assets at the Ras Laffan LNG complex and affected other Qatari volumes, tightening supplies and increasing volatility. Shell chief executive Wael Sawan warned publicly that parts of Europe could face supply pressure unless shipping through the Strait of Hormuz resumed, and the company said it was engaging with governments to address the tighter market.

Peers reported similar tailwinds. BP described an "exceptional" oil trading result, and ExxonMobil reported a roughly 6 percent hit to global production in the first quarter attributable to the Iran war. The sectorwide pattern is of trading desks benefiting from greater turbulence while upstream operations and liquefaction cope with physical disruptions.

Mastheads

Production and repairs

On the production side Shell forecast integrated gas output of 880,000-920,000 barrels of oil equivalent per day for the quarter, down from 948,000 in the fourth quarter of 2025.

The company said LNG liquefaction volumes would be about 7.6-8.0 million tonnes, broadly in line with the prior quarter after a ramp-up at LNG Canada helped offset weather-related hits in Australia and outages in Qatar.

Shell gave operational detail on the damage at Gulf sites. The company said an initial assessment showed repair of damage at the Pearl GTL site will take about a year for one affected train, while another train was not impacted. Shell also said some Qatar LNG plants had been placed into force majeure and were shut in earlier in March. Those outages, together with other operational hits and portfolio changes, were cited as reasons behind a slight decline in upstream production to about 1.76-1.86 million boe/d from 1.89 million boe/d in the prior quarter.

There is some divergence over the scale and timing of recovery. Shell's assessment points to a roughly one-year repair window for a Pearl GTL train, but regional officials cited in other accounts warned that reconstruction in some cases could take years. Estimates of the year-to-date percentage rise in oil also vary across reports, with one account putting the increase at more than 50 percent and another at about 60 percent, reflecting different baselines and reporting windows.

The company also flagged balance-sheet effects. Shell said working capital and refining-margin movements had pushed net debt and working-capital drag higher, a phenomenon other majors have warned about as they hold inventory into rising markets. One account disclosed a projected renewables trading and optimisation earnings range for the quarter of $200 million to $700 million; that figure was not repeated across all summaries of the update.

The update illustrates the split the sector now faces. Trading and marketing desks are reaping near-term rewards from violent price swings, while physical operators contend with shut plants, repair timetables and the consequences for output and cash flow. Shell confirmed that portfolio changes had also dented upstream output, underscoring that company statements are balancing market opportunity against operational strain.

Analysts and markets will be looking for the detail when Shell publishes full first-quarter figures. The company has scheduled a full results release for May 7, when trading gains, production numbers and working-capital effects will be quantified in detail. BP will publish its first-quarter results earlier, on April 28, offering an adjacent datapoint on how the sectorwide volatility turned into earnings and cash-flow outcomes for another major.

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Shell will publish full first-quarter results on May 7, when it's due to confirm the trading gains and quantify the production and working-capital effects.

This article was created with AI assistance.