Shell reports $6.92bn quarterly profit as Iran war boosts oil prices

Shell has reported first-quarter profits of $6.92bn, up from $5.58bn in the same period a year earlier and ahead of analyst expectations, as the energy giant benefited from the sharp rise in oil prices following the outbreak of the Iran war.

The results make Shell the latest major oil company to report a substantial increase in earnings since US and Israeli strikes on Iran disrupted global energy supply routes. The closure of the Strait of Hormuz, which normally carries around 20% of global oil and liquefied natural gas supplies, has driven significant volatility in Brent crude prices and created conditions that favour large trading operations. Tezons Business has been tracking the economic consequences of the Hormuz closure since the conflict began.

How oil trading lifted Shell's earnings

Before the conflict, Brent crude traded at approximately $73 a barrel. Since then, the price has swung sharply, reaching above $120 before retreating as the blockade's duration remained uncertain. Brent currently stands at around $101 a barrel. Wide price movements of this kind create larger gaps between buying and selling prices, a condition that typically allows energy traders to generate greater returns.

Shell chief executive Wael Sawan said the company had delivered strong results through a focus on operational performance during what he described as a quarter of unprecedented disruption in global energy markets. He added that the safety of Shell's workforce remained the priority as the company worked with governments and customers to address their energy needs.

Higher margins at Shell's refining business, which processes crude oil into products including petrol and jet fuel, also contributed to the quarterly profit increase.

Shell's results follow a similar earnings jump at rival BP, whose profits for the first quarter more than doubled. Norway's Equinor also reported its highest quarterly profit in three years, recording $9.77bn for the first three months of 2026.

Production falls as conflict hits Qatar operations

Shell's oil and gas output fell 4% compared with the final three months of last year. The company's LNG production in Qatar has been offline since early March due to the conflict, and its Pearl GTL facility in Qatar has sustained damage from attacks. The production decline illustrates how the same conflict that has boosted trading margins is simultaneously constraining Shell's upstream output.

In a separate development, Shell announced an agreement to acquire Canadian shale producer ARC Resources for $16.4bn. Sawan said the deal would deliver long-term value and represented a strategic effort to build supply capacity outside the conflict zone.

The Bank of England's response to the Iran energy shock has kept interest rates on hold at 3.75%, as policymakers weigh the inflationary pressure of elevated energy prices against slowing economic growth.

Windfall tax calls intensify as pump prices rise

The surge in energy company profits has drawn criticism from environmental groups. Friends of the Earth climate campaigner Danny Gross said fossil fuel companies were recording significant profits whilst drivers face pressure at the petrol pump and households prepare for higher energy bills.

Critics are calling for the UK government to strengthen the windfall tax applied to energy companies. The Energy Profits Levy, introduced in 2022 following Russia's invasion of Ukraine, currently applies only to profits from oil and gas extraction in the UK. The UK accounts for less than 5% of Shell's global oil and gas output, meaning the bulk of earnings falls outside the levy's scope. Labour extended the tax to March 2030.

For most households in Britain, gas and electricity bills remain protected by the energy price cap. The typical annual bill for a dual-fuel household paying by direct debit currently stands at £1,641 until 30 June. However, the sharp rise in wholesale oil and gas prices since the Iran war began means the cap is estimated to increase by around £200 when it is revised in July.

What this means for UK energy consumers

Shell's quarterly result illustrates the asymmetric nature of the current energy shock. Large integrated oil companies with substantial trading divisions and global refining operations are well positioned to profit from price volatility, whilst UK consumers absorb the consequences through rising pump prices and an anticipated energy bill increase in the summer. The upcoming revision to the energy price cap in July will be the clearest indicator yet of how far household energy costs have shifted in response to the disruption at the Strait of Hormuz.