Shell and BP Shares Nosedive Following Trump's Iran Ceasefire Announcement
Shell and BP experienced dramatic share price declines in early Wednesday trading after US President Donald Trump declared a two-week ceasefire with Iran, triggering a sharp drop in oil prices. The FTSE 100 oil giants were among the hardest hit as market sentiment shifted abruptly following the geopolitical development.
Oil Giants Suffer Significant Losses
Shell's share price plunged 7.1 percent to 3,311.4 pence, abruptly ending its rally during the Iran conflict period. Rival BP recorded an even steeper decline of 8.3 percent, trading at 547.8 pence. These substantial losses reflected investor concerns about the potential normalization of oil supplies through the critical Strait of Hormuz.
The temporary ceasefire agreement includes provisions for reopening the strategic waterway, which transports approximately one-fifth of global oil supplies. During the conflict, the closure of the Strait had choked oil and gas flows, sending energy prices soaring across multiple sectors from crude oil to jet fuel.
Brent Crude Plummets as Supply Fears Ease
Brent crude oil prices collapsed 13.5 percent to $94.5 during Wednesday's trading session, while West Texas Intermediate experienced its most significant single-day decline in nearly six years. The dramatic price movements followed Trump's ceasefire announcement and the potential reopening of the vital shipping corridor.
"A two-week ceasefire agreement between the US, Israel and Iran including the opening of the Strait of Hormuz marks a welcome step back from the threatened escalation of the conflict," said James Hosie, Equity Analyst at Shore Capital. "Even if this ceasefire becomes a more lasting peace agreement, we do not expect oil and gas prices to return to their pre-conflict levels as it will take time for industry operations in the Persian Gulf to normalise."
FTSE 250 Energy Companies Also Impacted
The market turbulence extended beyond the FTSE 100, with several FTSE 250 energy companies experiencing substantial declines. Harbour Energy tumbled 5.9 percent to 272.6 pence, while Ithaca Energy suffered a nine percent drop to 234.6 pence. Energean dipped 1.4 percent, and Diversified Energy Company fell 5.8 percent to 1,218 pence.
Matt Britzman, senior equity analyst at Hargreaves Lansdown, noted that oil prices will "likely remain choppy" until a permanent resolution is established. He emphasized that "The return of free-flowing traffic through the Strait of Hormuz, without any Iranian tolls or controls, feels essential if oil prices are going to start trending back toward levels we saw before the conflict began."
Shell's Production Challenges Amid Conflict
The share price decline coincided with Shell's first quarter trading update, which revealed the company had been forced to trim its production outlook following strikes on its Qatar operations. Integrated gas production fell to between 880,000 and 920,000 barrels of oil equivalent per day, down from 948,000 in the fourth quarter of 2025.
Shell had initially forecast production within a range of 920,000 to 980,000 barrels. Iranian retaliation strikes damaged Shell's key asset, the Ras Laffan complex in Qatar, which houses the world's largest LNG export terminal. The facility, responsible for supplying approximately one-fifth of global seaborne LNG shipments, suffered "extensive damage" that will require roughly a year to repair.
Mixed Outlook for Energy Sector
Despite the significant challenges, Shell reported some positive developments in its trading operations. The group's oil trading results, included under its chemicals and products unit, were "significantly higher" than the prior quarter. Additionally, refining margins per barrel are expected to reach $17, up from $14 in the final quarter of 2025.
Analysts caution that even with the ceasefire agreement, the energy sector faces a prolonged recovery period. Damage to oil fields and production facilities across the Gulf region will require substantial time and resources to repair, suggesting that a return to pre-conflict operational levels remains distant.
The Iranian foreign minister confirmed that passage through the Strait of Hormuz would continue under Iranian military management for the next two weeks, adding another layer of complexity to the evolving situation. As markets digest the implications of the ceasefire, energy companies and investors alike brace for continued volatility in the weeks ahead.
