The oil major said its adjusted earnings rose to $6.92 billion, comfortably above analyst expectations of $6.36 billion, and significantly higher than the $5.58 billion recorded in the same period last year.
The results reflect a period of heightened price swings in global crude markets, which Shell’s trading division was able to capitalise on.
In response to the strong earnings, Shell announced a 5% increase in its dividend, signalling confidence in long-term cash generation.
However, the company also scaled back its share buyback programme to $3 billion, down from $3.5 billion, choosing instead to retain more cash on its balance sheet amid short-term liquidity pressures.
Chief Financial Officer Sinead Gorman said the dividend decision reflects “the confidence we have in the long term cash flows of the company,” while also acknowledging that Shell’s shares remain undervalued in her view.
On the reduction in buybacks, she explained that the move was aimed at strengthening the balance sheet by redirecting cash.
A major driver of the earnings beat was Shell’s chemicals and products division, which includes refining and trading operations. The unit delivered profits of $1.93 billion, well above expectations of $1.24 billion, and a sharp increase from $0.45 billion a year earlier.
The performance highlights the growing importance of oil trading desks at major European energy firms, which benefit from rapid price movements in global markets. Rivals such as BP and TotalEnergies have also reported similar gains from trading activity.
However, Shell’s upstream output declined by about 4% quarter-on-quarter, largely due to operational disruptions in Qatar. The company said parts of its Pearl gas-to-liquids facility were damaged amid conflict-related tensions in the Middle East, with full repairs expected to take up to a year.
Shell’s financial position showed some strain despite strong earnings. Its gearing ratio—debt relative to equity, including leases—rose to 23.2%, up from 20.7% at the end of 2025.
The company attributed the increase to higher borrowing needs while managing volatility in energy prices and supply disruptions linked to geopolitical tensions.
Despite the rise in debt, Gorman said she remains comfortable with the company’s financial position, stating she is “very happy with Shell’s balance sheet.”
Shell’s operating cash flow stood at $6.1 billion, but was affected by sharp swings in inventory valuation. This contributed to a working capital position of minus $11.2 billion, reflecting short-term liquidity movements rather than structural weakness, according to the company.
Shell expects these fluctuations to reverse over time if oil and gas prices stabilise.
A key theme in the quarter was the impact of oil price volatility triggered by geopolitical tensions, including conflict involving the US, Israel, and Iran. The resulting market swings created favourable conditions for Shell’s trading operations, allowing the company to generate significant profits from short-term price movements.
At the same time, broader energy markets have seen crude prices retreat from peaks above $100 per barrel, contributing to a 2.2% dip in Shell’s share price in early trading—mirroring declines across the wider oil sector.
While Shell’s trading division continues to benefit from unstable global conditions, the company faces near-term challenges from production disruptions and rising debt levels.
Still, management remains confident in long-term cash generation, even as it balances shareholder returns with financial caution in a volatile energy environment shaped increasingly by geopolitical risk.