Shell has initiated a significant share buyback program following a robust first quarter that exceeded analyst expectations, propelled by surging oil prices. The FTSE 100 oil giant posted earnings of $6.9bn (£5bn), surpassing the consensus estimate of $6.4bn and marking a substantial increase from the $3.3bn recorded in the final quarter of 2025.
The company attributed the earnings jump to higher energy prices and reduced operating costs. Shell had previously indicated that its chemical and products division, which includes oil trading, would perform "significantly higher" than the previous quarter, a forecast that materialized amid a volatile market.
The surge in oil prices was fueled by geopolitical tensions, with crude reaching a four-year high of $126 a barrel just weeks ago. The conflict in the Middle East disrupted supply chains, particularly through the Strait of Hormuz, a critical chokepoint for about a fifth of the world's oil supply. Shell's upstream segment, encompassing crude oil, natural gas, and natural gas liquids, saw earnings rise to $2.4bn in the first quarter, up from $1.6bn in the prior quarter, despite a slight dip in production to 2,752 thousand barrels of oil equivalent per day from 2,859.
Gas Production Hit by Strikes
While the Middle East conflict boosted earnings through higher energy prices, it also negatively impacted Shell's gas output in the first quarter. Total integrated gas production fell by 4%, largely due to the shutdown of the PearlGTL site in Qatar. This facility was affected by Iranian attacks in the region, which also disrupted Shell's liquefied natural gas operations.
In response to these challenges, Shell recently agreed to acquire Canadian energy firm ARC Resources for $16.4bn. The company stated that this acquisition would strengthen its gas production and reserves for decades to come.
Looking ahead, Shell expects full-year cash capital expenditure to range between $24bn and $26bn, up from $21bn the previous year, primarily due to the ARC acquisition. The company's strong performance and strategic moves underscore its resilience in a turbulent energy market.
