Shell posted adjusted earnings of $9.84 billion in the second quarter, its best result since mid-2022, as the Iran war drove up prices
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Shell $SHEL reported second-quarter adjusted earnings of $9.84 billion on Thursday, more than double the $4.26 billion it recorded in the same period a year ago, as fighting in the Middle East pushed oil and gas prices higher. That places it as Shell's highest quarterly profit since Q2 2022, when the company earned $11.47 billion amid the energy price spike that followed Russia's full-scale invasion of Ukraine, according to CNBC.
The second-quarter figure beat analyst expectations of $8.79 billion, according to CNBC, citing an LSEG-compiled consensus. Operations generated $21.4 billion in cash flow during the quarter, with a $3.4 billion working capital inflow adding to the benefit of stronger realized prices, the company said.
"Volatility is the new normal," CEO Wael Sawan said. "What we have been trying to build is a company that is able to thrive through volatility."
The ongoing conflict has given oil majors an unexpected earnings windfall, according to The Wall Street Journal. The closure of the Strait of Hormuz by Iran — a chokepoint that normally carries a fifth of global oil and gas — has driven up prices as buyers rushed to find alternative supplies, boosting Shell's trading operations, while refiners have also gained from margins running at historic highs. To capitalize on the favorable margin environment, Shell pushed its refineries to record throughput levels and grew jet fuel output by 20% year-on-year.
The conflict has also cut into Shell's production. War-related damage has forced Shell to idle or curtail operations at its Qatari holdings — among them the Pearl gas-to-liquids plant and its interest in a QatarEnergy LNG facility — costing the company around 10% of total production, according to the Journal. CFO Sinead Gorman said Shell is prepared to restart part of the undamaged plant once the Strait of Hormuz reopens, and that the conflict has not changed the company's long-term view of Qatar.
Shell's strong results this quarter follow a period of mounting financial strain. The company cut its quarterly buyback to $3 billion from $3.5 billion in May and saw net debt climb to $52.6 billion at the end of the first quarter after a $11.2 billion working capital outflow tied to rising commodity prices. Shell reported Thursday that net debt had declined to $41.75 billion, and announced another $3 billion buyback — extending its streak of at least that figure to 19 straight quarters — while the quarter's robust cash generation allowed the company to reduce borrowings at the same time.
Shell stock rose 1.5% on Thursday. Capital expenditure guidance for 2026 remains unchanged at $24 billion to $26 billion, the company said.
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