Plummeting Shell profits due to slumping oil prices, stoked by trade war anxieties, trigger a surprising surge in share prices.
Shell's profits took a hit in Q1 2025, dropping by nearly 27%, partly due to lower energy prices and refining margins. The heating giant reported adjusted earnings of approximately $5.6 billion, falling short of last year's $7.7 billion but outperforming analyst forecasts of around $5 billion.
Fears of an economic slump related to US President Donald Trump's trade war have stirred up in recent months, placing a damper on oil prices. The global benchmark Brent crude dwindled to around $75 a barrel in the first quarter, down from last year's $87. Profits were bolstered by lower well write-offs, reduced operating costs, and improved products margins, according to Shell.
In March, the corporation vowed to return more cash to investors as a result of increased liquefied natural gas sales. Shell's refining margin showed an indicative value of $6.20 a barrel, though this fell short of the $12 achieved the previous year and the $5.50 seen in Q4 2024.
Shell made public an indicative charge of $0.5 billion related to the UK Energy Profits Levy and impairment costs. These charges set Shell back $800 million for the quarter, marking a decline from the $2.8 billion seen in Q4 2024. Despite the charges, the company maintained its share buyback program, committing to acquiring $3.5 billion worth of shares in the second quarter and signifying the 14th consecutive quarter of at least $3 billion in buybacks.
In contrast, rival firm BP has slashed its buybacks to reinforce its balance sheet. Shell's gearing ratio is also lower, checking in at 18.7% compared to BP's 25.7%. Shell's gas trading business maintained its performance from the previous quarter despite absorbing losses from expired hedging contracts. Meanwhile, BP reported a weak first-quarter performance in its gas trading division.
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From the data provided, there's no clear evidence indicating that US tariff-related impacts had a significant role in Shell's Q1 2025 results. The focus for the corporation remained on divestments and share buybacks, as well as maintaining dividends.
- Shell's earnings in Q1 2025, despite a drop, outperformed analyst forecasts, indicating a resilience even amid reduced oil prices and the US trade war.
- The energy industry's financial landscape in 2025 is marked by lower oil prices, with the global benchmark Brent crude averaging around $75 a barrel, a decline from the previous year.
- Shell, in its Q1 2025 report, cited lower well write-offs, reduced operating costs, and improved products margins as factors that bolstered its earnings, despite the economic uncertainties caused by the US trade war.
- In the face of increased liquefied natural gas sales, Shell announced its intention to return more cash to investors in Q1 2025, maintaining its share buyback program, committing to purchase $3.5 billion worth of shares.
- In comparison, Shell's rival firm, BP, has choose to cut back on buybacks to reinforce its balance sheet, demonstrating a difference in their financial strategies in the energy industry.
