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Shell plc posted stronger-than-expected first-quarter earnings as the Iran war drove up oil and gas prices and boosted trading profits, offsetting conflict-related declines in production.
“Shell delivered strong results enabled by our relentless focus on operational performance in a quarter marked by unprecedented disruption in global energy markets,” Chief Executive Wael Sawan said.
Adjusted earnings rose to $6.9bn (€5.86bn) in the first quarter of 2026, up 24% from $5.6bn (€4.75bn) a year earlier. Shell also announced a 5% increase in its dividend, alongside a $3bn share buyback programme over the next three months.
“A key profit driver has been the Middle East conflict, leading to a spike in oil prices, meaning Shell was able to sell its products at much higher prices,” said Dan Coatsworth, head of markets at AJ Bell. He added that, “The oil price has been volatile since the conflict began on stop-start hopes of a resolution, and that volatility created opportunities for Shell’s trading arm.
Before the war broke out, international oil prices were trading at roughly $70 a barrel. The conflict-driven supply shock later pushed Brent crude to a peak of around $126 a barrel, its highest level in more than four years. On Thursday morning, Brent futures for next month’s delivery fell below $100, amid hopes of a diplomatic breakthrough between the United States and Iran.
Outlook and the impacts on production in the Middle East
Higher crude prices and stronger refining margins lifted profits across the sector. But Coatsworth noted that Shell also faced operational setbacks, including damage to one of its facilities in Qatar during the conflict and cyclone-related stoppages at one of its liquefied natural gas sites in Australia.
Around 20% of Shell’s oil and gas production comes from the Middle East, leaving the company exposed to prolonged disruption in the region.
Shell signalled that gas production in Qatar is expected to fall by at least 30% in the second quarter compared with the first three months of 2026. However, it said its assets in Oman remain operational and that upstream production has not been affected.
“Strategically, the longer-term question remains reserve replacement and production growth,” said Maurizio Carulli, global energy analyst at Quilter Cheviot, commenting on the challenges ahead of the company. “The recent ARC Resources acquisition is a meaningful step in that direction, lifting Shell’s production outlook from stagnation to modest but visible growth.”
The company recently announced the acquisition of ARC Resources Ltd., a producer focused on the Montney shale basin in Canada. Analysts say the deal strengthens Shell’s shale gas and liquids production in Canada.
An extended windfall tax on earnings?
In the United Kingdom, Shell’s sharp rise in profits has reignited the debate around an extended windfall tax on energy earnings.
“Once again, fossil fuel giants are pocketing monstrous profits while drivers are being squeezed at the petrol pump and households are set to pay higher energy bills,” said Danny Gross, climate campaigner at Friends of the Earth, to the BBC. He suggested the strengthening of the windfall tax on fossil fuel companies’ profits.
Energy firms operating in the UK are already subject to a windfall tax, but the levy applies only to profits generated from oil and gas extraction in the UK. The country accounts for less than 5% of Shell’s global oil and gas production.
“Calls for a windfall tax on oil profits will only grow louder now that both Shell and BP plc have reported bumper earnings as a direct result of the Middle East war,” Coatsworth said. He added that “the longer oil prices stay higher, the harder it will be for them to oppose any windfall tax suggestions.”
Shell shares were down by around 2% after the results, though analysts said the decline reflected broader market expectations that shipping through the Strait of Hormuz could soon resume, rather than company-specific concerns.
“Shell’s first-quarter numbers were clearly better than expected,” Carulli said. “The early share price weakness looks entirely macro-driven rather than company-specific, with oil stocks broadly under pressure on hopes of a rapid resolution to the Strait of Hormuz disruption.”
