Shell Posts Bumper Quarterly Profit as Iran War Keeps Oil Prices Elevated

BBC Business reported Thursday that Shell has become the latest oil major to post sharply higher earnings, driven by elevated crude prices since the start of the US-Israel conflict with Iran.

The company generated $6.92 billion in first-quarter profit. That figure comfortably exceeded analyst expectations and represented a gain of nearly 25% over the same period last year.

Hormuz Closure Reshapes Global Energy Markets

The Strait of Hormuz sits at the center of the disruption. The waterway normally handles around 20% of worldwide oil and liquefied natural gas flows. Its effective closure since the conflict began has sent Brent crude prices on a volatile ride, briefly topping $120 a barrel before settling near $101 currently. Before the war, Brent traded around $73.

Shell chief executive Wael Sawan said the company delivered strong results through an “unprecedented disruption in global energy markets,” adding that supporting governments and customers through the crisis remained a core priority.

Trading Desk and Refining Margins Drive the Upside

Wide price swings tend to benefit oil traders, who can exploit the gap between buying and selling prices. Shell’s trading arm capitalised on exactly that dynamic, mirroring a similar tailwind reported last week by rival BP, whose first-quarter profit more than doubled. Norway’s Equinor also disclosed Wednesday that its Q1 earnings hit $9.77 billion, the strongest quarterly result in three years.

Shell’s refining business added further lift, with margins improving as crude was converted into petrol and jet fuel. The gains partly offset a 4% drop in overall oil and gas output versus the prior quarter. Shell’s LNG operations in Qatar have been offline since early March, and its Pearl GTL facility there sustained damage from attacks.

Background: Windfall Taxes and the ARC Resources Deal

The surge in energy profits is rekindling political debate in Britain. The UK’s Energy Profits Levy, introduced in 2022 after Russia’s invasion of Ukraine, was extended by the Labour government to March 2030. Critics including Friends of the Earth are calling for the charge to be strengthened. However, the levy targets only UK extraction, which accounts for under 5% of Shell’s global output. British household bills are capped until June 30 at a typical £1,641 per year, but that cap is forecast to rise by roughly £200 in July.

Separately, Shell last week announced a $16.4 billion acquisition of Canadian shale producer ARC Resources, a deal Sawan described as capable of delivering value for decades.

Maersk Passes Rising Costs to Customers

The energy shock is rippling beyond the oil patch. Danish shipping group Maersk chief executive Vincent Clerc told the BBC that surging fuel costs are adding roughly half a billion dollars in monthly expenses to its operations. Clerc said the company intends to pass those increases on to customers wherever possible to protect margins, though he acknowledged uncertainty over the broader inflationary consequences.

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