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Shell’s traders and refineries powered the oil major to its biggest quarterly profit in two years after the Middle East conflict upended the market for gasoline, diesel and jet fuel.
The London-listed group on Thursday reported adjusted profits of $6.92bn for the first three months of 2026, up almost a quarter from a year ago and ahead of the $6.36bn forecast by analysts.
Wael Sawan, Shell chief executive, said energy markets would continue to be hugely affected by the war. “We see a much tighter market in the short term across most parts of the energy complex, and then in the medium term, depending on how long the conflict continues,” he said.
He said the world had a “hole of 1bn barrels”, referring to the oil lost as a result of the war. “Every day the Strait [of Hormuz] is constrained, we’re digging deeper. And so the journey all the way back up will be a long journey.”
Traders typically benefit from volatility because sharp price swings create larger spreads between buyers and sellers, more opportunities for arbitrage and demand for hedging from customers such as utilities and airlines.
Shell has stakes in seven refineries, with four in Europe and three in North America. Profits from its refineries, which turn crude oil into products such as diesel, gasoline and jet fuel, jumped to more than $2bn in the period.
While its refineries and traders profited during the turbulence from the conflict, Shell also took a near $2.4bn hit on the value of its hedging contracts as oil and gas prices swung wildly. It also booked a $635mn charge from an undisclosed legal case in its gas business in the quarter.
Meanwhile, the company’s net debt climbed more than $11bn year on year to $52.6bn, although the increase was less than expected by analysts.
But in a sign of the damage inflicted on energy facilities across the Gulf, Shell said its gas production dipped in the first quarter and would decline at least 30 per cent in the second.
“We have assumed no production coming out of Qatar in the second quarter on any of our units,” Sawan said. “That’s a sum total of around 300,000 barrels of oil equivalent a day and that’s a material impact.”
But he added that Shell would benefit from higher prices for its gas in the quarter. “There is plenty of offset for that weaker volume,” he said.
The Middle East accounts for about a fifth of Shell’s oil and gas production, although half of that lies in Oman, which is outside the Strait of Hormuz.
Shell raised its dividend by 5 per cent, a move that analysts estimated would cost about $400mn to $500mn a year, but trimmed the amount of shares it plans to buy back over the next three months from $3.5bn to $3bn as it warned that tougher times lay ahead because of the Iran war.
Shares in the company were down 2.4 per cent in early trading. Matthew Lofting, an analyst at JPMorgan, noted that while Shell’s results had been “solid”, he expected geopolitics to “prove more significant” for the share prices of European oil companies in the weeks ahead, as the US, Israel and Iran search for a solution to the conflict.
Pearl, the company’s vast gas-to-liquids plant in Qatar, was struck by Iranian missiles in March and required significant repair work. It is also projecting lower oil production and lower volumes of liquefied natural gas (LNG).
Sinead Gorman, Shell’s chief financial officer, said the repairs to Pearl would cost about $500mn and take about a year. Sawan said he had visited the site two weeks ago and that the repair team was “in full throttle at the moment, ready to go”.
Gorman said that part of Pearl, as well as Shell’s interest in QatarEnergy’s LNG facilities, were “start-up ready, subject to our ability to move products through the Strait of Hormuz”.
Shell’s profits come a week after UK rival BP hailed an “exceptional” performance from its traders that saw it double its first-quarter adjusted profits year on year to $3.2bn.
Shell last month announced its largest takeover deal for a decade when it agreed to buy Canadian shale producer ARC Resources for $16.4bn.
