Shell Profits Surge as Iran War Squeezes Global Oil Supply

BBC Business reported Thursday that Shell posted first-quarter profit of $6.92 billion, beating analyst expectations and rising roughly 24% from the $5.58 billion it recorded a year earlier.

Iran War Disruption Drives Oil Windfall

The Strait of Hormuz, which ordinarily channels around 20% of the world’s oil and liquefied natural gas shipments, has been effectively closed since the US-Israel conflict with Iran began. That disruption pushed Brent crude from roughly $73 a barrel beforehand to a peak above $120, with prices currently hovering near $101. Shell chief executive Wael Sawan credited the results to operational discipline during what he called unprecedented disruption in global energy markets. He also noted that the safety of staff and cooperation with governments and customers remained central priorities.

Shell’s trading division was a standout contributor. Wide price swings typically widen the spread between buying and selling prices, giving traders room to generate outsized returns. Refining margins also expanded as the company converted crude into petrol and jet fuel at improved spreads.

Background: Rivals Are Cashing In Too

Shell is not alone. BP reported last week that its own first-quarter profits more than doubled. Norway’s Equinor disclosed Wednesday that its quarterly earnings hit $9.77 billion, the company’s strongest result in three years. The pattern reflects a broader windfall across the sector as geopolitical supply shocks overwhelm any demand-side pressure.

Not everything went Shell’s way. Total oil and gas output dropped 4% against the prior quarter, and Shell’s LNG operations in Qatar have been offline since early March. Its Pearl GTL facility there has also sustained conflict-related damage.

Acquisition and Political Pressure Mount

Last week Shell announced a $16.4 billion deal to acquire Canadian shale producer ARC Resources, a move Sawan described as one that would generate value for many years ahead. Critics, however, argue the acquisition compounds existing concerns about fossil-fuel dependence.

Environmental groups have renewed calls to tighten the UK’s Energy Profits Levy, which taxes North Sea extraction but does not reach the overseas earnings that represent the bulk of Shell’s revenue. The UK accounts for under 5% of the company’s global production. Meanwhile, the Iran war’s cost ripple reached Danish shipping giant Maersk, whose CEO Vincent Clerc told the BBC the conflict is adding roughly $500 million in monthly costs, which the firm is actively passing on to customers.

UK household energy bills face their own pressure. The typical annual bill is currently capped at £1,641, but revised wholesale prices could push that figure up by around £200 when the cap resets in July.

Read Next: BP Profits More Than Double as Iran War Sends Oil Prices Soaring