Shell has become the latest energy giant to face political and public backlash after reporting a sharp jump in profits fuelled by soaring oil prices linked to the conflict in the Middle East.
The FTSE 100 group posted underlying earnings of 6.92bn US dollars (£5.09bn), more than double the previous quarter’s figure and 24pc higher than the same period last year, comfortably ahead of analyst expectations.
Markets had forecast profits of around 6.36bn dollars (£4.67bn), but stronger-than-expected trading in oil and refined products helped lift the result beyond forecasts.
The earnings surge comes after weeks of volatility in global energy markets triggered by the war involving Iran and the continuing disruption around the strategically vital Strait of Hormuz, a key route for global oil and gas shipments.
Brent crude surged as high as 126 dollars a barrel last week — its highest level in four years — amid fears of supply disruption and wider regional escalation. Prices have since retreated on hopes of renewed diplomacy, though oil remains close to 100 dollars a barrel, well above pre-crisis levels.
Shell said the increase in crude prices significantly boosted its oil trading business, while profits in its chemicals and products division more than quadrupled to 1.93bn dollars (£1.41bn), up from 449m dollars (£330m) a year earlier.
The figures are likely to intensify criticism of the oil sector at a time when households and businesses continue to grapple with elevated fuel and energy costs.
Campaign groups accused the company of profiting from geopolitical instability while consumers absorb the impact through higher transport, heating and operating costs.
The backlash echoes criticism directed at BP last week after the rival oil major reported first-quarter profits of $3.2bn (£2.35bn), more than double expectations, aided by strong performance in its trading operations amid recent energy market turmoil.
Simon Francis, coordinator of the End Fuel Poverty Coalition, said: “Shell’s outrageous results prove what every household knows: that the Middle East conflict is driving profits for energy firms while families across Britain dread the next bill landing on their doormat.
“But while the profits of North Sea oil and gas giants soar and the cost of living keeps rising, these same companies are actively lobbying against windfall taxes and calling for tax cuts.”
Despite the strong earnings, Shell’s shares fell around 2pc after the company announced a reduction in shareholder returns. Quarterly share buybacks were cut from 3.5bn dollars (£2.6bn) to 3bn dollars (£2.2bn), although the group also unveiled a 5pc increase in its dividend payout.
Investors appeared to focus on the lower buyback programme, which some analysts interpreted as a sign the company is seeking to preserve financial flexibility amid ongoing geopolitical uncertainty and fluctuating oil prices.
Shell’s chief financial officer, Sinead Gorman, said: “We fully understand how energy prices affect people and businesses.
“Our people are working incredibly hard to meet people’s energy needs.
“We’re doing our best to offset some of the impacts around the world.”
The latest results underscore how major oil companies continue to benefit from periods of extreme market volatility, particularly when disruptions affect global supply routes and energy infrastructure.
Analysts said trading divisions within the largest integrated energy groups have been especially well positioned to profit from sharp price swings, regional dislocations, and uncertainty around supply flows.
At the same time, the political pressure on the sector is intensifying. Calls for tougher windfall taxes and intervention in energy markets have resurfaced as governments confront rising public anger over fuel costs and corporate profits.
For now, however, the oil majors remain buoyed by a market environment shaped by geopolitical instability, constrained supply and fragile diplomatic efforts in the Gulf — conditions that continue to support elevated prices even as fears of outright escalation begin to ease.
Leave a Comment