Shell Posts Higher Q1 Profits as Iran War Tightens Oil Supply
BBC Business reported Thursday that Shell posted first-quarter profits of $6.92 billion, surpassing analyst expectations. The result marks a notable jump from the $5.58 billion the company recorded in the same quarter last year. The key driver was the sharp climb in oil prices following the outbreak of the US-Israel war with Iran.
Hormuz Closure Reshapes the Oil Market
The Strait of Hormuz — the critical chokepoint that normally carries roughly 20% of the world’s oil and liquefied natural gas — has been effectively shut since the conflict began. Before hostilities started, Brent crude was trading near $73 a barrel. Prices have since swung violently, briefly spiking past $120 before pulling back. Brent currently sits around $101 a barrel.
Those wild price swings have proved lucrative for Shell’s trading desk. Wide gaps between buying and selling prices typically allow energy traders to capture outsized margins. Shell’s trading performance was a standout contributor alongside its upstream operations.
Shell chief executive Wael Sawan told BBC Business the company had delivered strong results through a disciplined operational focus “in a quarter marked by unprecedented disruption in global energy markets.”
Output Fell Even as Profits Rose
Not every metric moved in Shell’s favour. The company’s oil and gas production dropped roughly 4% compared with the final quarter of last year. Shell attributed that decline partly to damage sustained by its Pearl gas facility in Qatar as a result of the regional conflict.
Last week, Shell also announced a $16.4 billion deal to acquire Canadian shale producer ARC Resources. Sawan described the acquisition as one that would generate returns for decades ahead, signalling confidence in long-term fossil fuel demand despite current market volatility.
Windfall Tax Pressure Mounts Again
Shell’s bumper result arrived just days after rival BP reported its own first-quarter profits had more than doubled. The twin announcements have reignited calls for tougher windfall levies on energy companies.
The UK’s Energy Profits Levy has been in place since 2022, originally introduced after Russia’s invasion of Ukraine sent prices soaring. Labour extended the tax’s lifespan to March 2030. Critics note, however, that the levy only captures profits from UK extraction activity, leaving the bulk of overseas earnings untouched.
Environmental group Friends of the Earth called the profits “monstrous” and urged the government to tighten the windfall charge while accelerating a shift toward homegrown renewable energy.
For British households, the near-term outlook offers little relief. The energy price cap is forecast to rise by around £200 when it is revised in July, reflecting the higher wholesale costs triggered by the Iran conflict.
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