Shell (SHEL.L) fell 6.7% to 3,328 even as the energy giant flagged a sharp jump in trading profits for the first quarter, a reminder that war-driven volatility can create winners and losers inside the same company. On one side, Shell said trading in its chemicals and products business is expected to be “significantly higher” than in the previous quarter as extreme swings in oil, gas and fuel markets created fresh opportunities for its global desks. On the other, the group cut its gas production outlook after attacks linked to the Iran conflict hit assets in Qatar and added to wider supply disruption across the Gulf.
The contrast is striking. Shell’s renewables and energy solutions division is expected to post earnings of between $200 million and $700 million for the quarter, up from about $100 million in the final quarter of 2025. That scale of improvement shows just how profitable commodity volatility can become for a company with a large trading arm. The latest quarter was dominated by sharp moves in Brent crude, LNG, jet fuel and power markets after tensions escalated around the Strait of Hormuz, one of the world’s most important energy shipping routes.
But the same crisis that helped lift trading profits also damaged real production. Shell said integrated gas production is now expected at 880,000 to 920,000 barrels of oil equivalent a day in the first quarter, down from 948,000 barrels a day in the fourth quarter. The company had previously guided for 920,000 to 980,000 barrels a day, so the latest update marks a clear downgrade. Shell linked the weaker outlook to the impact of the Middle East conflict on its Qatari assets, including disruption around the Pearl GTL site and LNG facilities in the country partly owned by the group. Attacks also damaged Shell-linked assets at Ras Laffan, one of the world’s most important liquefied natural gas hubs.
The hit from Qatar was not the only problem. Shell also said cyclone Narelle affected Australian production during the quarter. Some of that weakness is expected to be offset by the ramp-up from LNG Canada, but not enough to stop an overall decline in gas output. The company said LNG liquefaction volumes are expected at 7.6 million to 8 million tonnes, broadly in line with the 7.8 million tonnes reported in the previous quarter. Upstream production is also expected to slip to between 1.76 million and 1.86 million barrels of oil equivalent a day, compared with 1.89 million barrels a day in the previous quarter, partly because of portfolio changes.
Key numbers behind the Shell story
There are several figures investors are watching closely. Shell’s stock price dropped 6.7% to 3,328. Integrated gas production is now seen at 880,000 to 920,000 barrels of oil equivalent a day, versus 948,000 in the fourth quarter. Renewables and energy solutions earnings are expected at $200 million to $700 million, up from roughly $100 million. LNG volumes are forecast at 7.6 million to 8 million tonnes, near the prior quarter’s 7.8 million tonnes. Upstream production is expected at 1.76 million to 1.86 million barrels a day, down from 1.89 million. Shell also said indicative refining margins improved to about $17 a barrel from $14 previously, a supportive sign for the chemicals and products division. Brent crude averaged about $81 a barrel during the quarter, up from $76 a year earlier, although prices briefly surged to almost $120 a barrel at the height of the crisis before sliding back toward $92.8 after news of a two-week ceasefire.
That price action matters because Shell is operating in two markets at once. The first is the physical market, where output interruptions in Qatar and Australia are weighing on volumes. The second is the paper and trading market, where price dislocation and supply fears can deliver an earnings windfall. Shell’s marketing earnings are also expected to come in “significantly higher” than the same period last year, despite slightly lower volumes, adding another layer of support to the quarter.
The broader backdrop remains tense even after oil prices eased on hopes of a temporary de-escalation. Crude dropped below $100 a barrel on April 8 after the United States and Iran agreed to a two-week ceasefire. Iran also signaled that the Strait of Hormuz would temporarily reopen during that period, allowing oil and fuel tankers back into the global market. That move cooled prices, but the market is still carrying the scars of a quarter in which Brent crude, jet fuel and gas prices all surged as traders priced in the risk of a prolonged supply shock.
Shell chief executive Wael Sawan had already warned that Europe could face fuel and energy shortages in April if the strait remained shut. He also said the company was working with governments to address the oil and gas supply crisis, which had already triggered energy rationing in parts of Asia. His warning was blunt: South Asia took the first hit, then south-east Asia, then north-east Asia, with Europe next in line as the calendar moved deeper into April. That context helps explain why investors are looking beyond a single quarter’s trading gains and focusing on what repeated disruption in the Gulf could mean for Shell’s core gas business.
For now, Shell’s update tells a bigger story than a simple earnings beat or miss. It shows how quickly a major oil and gas company can benefit from chaos in one part of the business while suffering operational pain in another. Investors will welcome stronger trading and better refining margins, but they are also being forced to weigh those gains against weaker production, damaged assets, geopolitical risk and questions about whether the current ceasefire will hold. That is why the stock has struggled despite the prospect of a profit jump. The market is not ignoring the upside. It is simply pricing in the fact that war-driven windfalls rarely come without a cost.
Readers tracking Shell’s next update can follow the company’s official investor page here. For wider coverage of the company’s latest trading statement and the impact of the Iran conflict on energy markets, The Guardian’s report is here.
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