Shell plc SHEL has outlined a mixed outlook for its first-quarter performance, shaped largely by the ongoing U.S.-Israel conflict with Iran. While disruptions have weighed on gas output and liquidity, the company expects strong gains from oil trading and marketing to offset part of the impact.
Shell’s first-quarter update highlights that the company is navigating extraordinary market conditions. While geopolitical disruptions are weighing on gas production and liquidity, robust oil trading and marketing performance provide a critical cushion.
As volatility persists, Shell’s diversified portfolio and strong trading capabilities position it to manage near-term challenges while maintaining financial resilience.
Oil Price Surge and Market Disruptions
Global oil markets have experienced extreme volatility, with Brent crude prices surging to nearly $120 per barrel following geopolitical tensions. The conflict led to Iran closing the Strait of Hormuz and launching attacks on regional infrastructure, including Shell-linked facilities in Qatar, including the Pearl gas production plant, where repairs may take about a year.
This instability has driven sharp swings in commodity prices, significantly impacting inventory values and pushing Shell’s working capital to a negative range of $10-$15 billion during the quarter. However, the company expects these movements to reverse if prices stabilize.
Strong Oil Trading and Marketing Performance of SHEL
Despite operational challenges, Shell anticipates a notable upside in its oil trading and marketing businesses. The company expects significantly higher trading results in the chemicals and products segment (includes oil trading) as compared to the previous quarter and stronger adjusted earnings in its marketing division, including fuel stations.
Analysts echo this optimism. RBC and UBS have both raised their earnings forecasts, projecting net income of around $6.8-$6.9 billion and strong operating cash flow growth (excluding working capital effects).
Gas Output Takes a Hit
Shell has lowered its integrated gas production guidance for the first quarter of 2026 to 880,000-920,000 barrels of oil equivalent per day, down from earlier expectations and below the 948,000 boed recorded in the fourth quarter of 2025.
The decline is primarily due to disruptions in Qatar, where geopolitical tensions have impacted production volumes.
SHEL’s LNG Outlook Remains Stable
While gas output is under pressure, Shell’s LNG liquefaction volumes are expected to remain within guidance at 7.6-8 million tons. This balance is driven by a ramp-up at LNG Canada, offsetting the weather constraints in Australia and the outages in Qatar.
Shell continues to maintain a strong presence in LNG markets, including a 30% stake in QatarEnergy LNG N(4), which was not impacted by recent attacks.
Infrastructure Damage and Operational Impact
The conflict has directly affected key infrastructure. At the Pearl GTL facility in Qatar. While train one remains undamaged, train two may take about a year to fully repair.
Additionally, QatarEnergy temporarily shut in LNG production and declared force majeure, further disrupting supply chains.
Rising Debt but Manageable Balance Sheet
Shell expects its net debt to increase by $3-$4 billion due to variable components of long-term shipping leases. At the end of 2025, SHEL’s net debt stood at $45.7, with gearing at 17.7% (below the company’s 20% comfort threshold).
SHEL’s Zacks Rank & Key Picks
London-based Shell is one of the primary oil supermajors with operations that span almost every corner of the globe. The company is fully integrated and participates in every aspect related to energy — from oil production to refining and marketing. Currently, SHEL carries a Zacks Rank #3 (Hold).
Investors interested in the energy sector may consider some better-ranked stocks like Chord Energy Corporation CHRD, Vermilion Energy Inc. VET and Antero Midstream Corporation AM. While Chord Energy and Vermilion Energy sport a Zacks Rank #1 (Strong Buy) each at present, Antera Midstream carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Established through the merger of Oasis Petroleum and Whiting Petroleum in July 2022, Chord Energy has rapidly ascended as a leading E&P entity in the Williston Basin. Chord Energy's operations span across the Bakken and Three Forks formations, where the company boasts an impressive base of high-quality, oil-weighted resources. The Zacks Consensus Estimate for CHRD’s 2026 earnings indicates 26.2% year-over-year growth.
Calgary, Canada-based Vermilion Energy is an international oil and gas producer with properties in Western Canada, Australia, France and the Netherlands. The Zacks Consensus Estimate for VET’s 2026 earnings indicates 297.4% year-over-year growth.
Denver, CO-based Antero Midstream is a leading provider of integrated and customized midstream services. In the gas-rich Marcellus and Utica Shale plays, the company operates natural gas gathering pipelines, compression stations, and processing and fractionation plants. The Zacks Consensus Estimate for AM’s 2026 earnings indicates 32.6% year-over-year growth.
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