LONDON, April 6, 2026, 12:18 BST
Shell heads into a quarterly update on Wednesday with oil still above $107 a barrel after another sharp swing in the market, putting the focus back on how much cash the company can generate in the first quarter. Brent fell $1.92 on Monday to $107.11 as traders weighed a U.S.-Iran peace proposal, but the Strait of Hormuz remained largely closed and supply disruptions persisted. Mukesh Sahdev, founder and CEO of XAnalysts, said the standoff over Hormuz was increasingly about “political victory.” Reuters
The timing matters because Shell is due on April 8 to outline the expected financial effects of the conflict before full results on May 7. Reuters reported last month that three analysts covering Shell had raised their first-quarter net profit estimates by an average of 15%, while Brent averaged around $97 a barrel in March, up 33% from February’s $69 average.
That has put Shell’s payout policy back in view. “The first quarter is going to be phenomenal for these companies,” Leo Mariani, a senior research analyst at Roth Capital Partners, told Reuters. For Shell, investors are also watching whether that strength is enough to keep shareholder returns at current levels. Reuters
That question lands as Europe’s earnings season leans more heavily on energy. STOXX 600 companies are expected to post 4% growth in first-quarter earnings, with energy profits seen rising 24.9%, according to LSEG I/B/E/S data.
Shell went into the price spike from a softer base. It reported fourth-quarter net profit of $3.3 billion in February, down 11% and below forecasts, but kept its quarterly buyback at $3.5 billion. Shareholder payouts over the prior four quarters reached 52% of operating cash flow, above the company’s 40% to 50% target range, which CFO Sinead Gorman called “sacrosanct.” Reuters
Peers have taken different lines. Exxon has held its $20 billion buyback steady this year, while Equinor cut its programme by 70%. Chevron, Exxon and Shell are all expected to show stronger first-quarter earnings as higher crude prices lift oil and gas production earnings, although hedging and timing can delay some of that benefit.
But the upside is messy. Part of Shell’s Pearl gas-to-liquids plant in Qatar, which turns gas into transport fuels, was damaged in attacks last month, and refiners are paying record premiums to replace lost Middle Eastern barrels. Offers for WTI Midland, a key U.S. crude grade, to North Asia have climbed to $30-$40 a barrel above benchmark, while bids into Europe hit nearly $15 above the North Sea Brent benchmark.
“Asian refiners, shut out of Middle Eastern supply, are bidding aggressively for every available Atlantic Basin barrel,” said Paola Rodriguez-Masiu, chief oil analyst at Rystad Energy. At current freight rates and spot premiums, she said, European refiners buying crude in the spot market “cannot make money” running those barrels. That is a warning for Shell’s refining and trading business even as higher oil prices help its oil and gas production businesses. Reuters
Politics is another risk. Five EU countries have asked Brussels to consider an EU-wide windfall tax — a levy on unexpected profits — on energy companies to help fund relief for consumers, and the European Commission said it was assessing the proposal.
Shell’s quarterly update on Wednesday should provide the market’s first official read on how those cross-currents hit the quarter. Full first-quarter results are scheduled for May 7.
