Shell has reported a sharp rise in second-quarter profit, with net earnings more than doubling year-on-year to $9.84 billion, driven by higher energy prices, strong liquefied natural gas (LNG) trading, and increased market volatility during the Middle East conflict.
The British energy giant’s adjusted earnings exceeded analysts’ expectations of $8.92 billion, compared with $4.26 billion recorded in the same period last year.
The company said stronger oil and gas prices, improved chemicals margins, and robust trading in LNG and oil helped offset lower production volumes caused by disruptions to its operations in Qatar.
Market volatility linked to the conflict involving the United States, Israel, and Iran also created favourable trading conditions for major energy companies, including Shell, BP, and TotalEnergies.
Shell said its refineries operated at 102% of nameplate capacity during the quarter to maximise production amid strong fuel prices. Jet fuel production increased by 20% compared with the same period last year.
Shares in Shell rose 0.8% in early trading, outperforming the broader European energy sector.
The company described the quarter as its second-most profitable on record, surpassed only by the second quarter of 2022, when Russia’s invasion of Ukraine caused major disruptions to global energy markets.
Shell also reported its highest operating cash flow since 2022, including working-capital movements. Despite the strong performance, the company said it would maintain its share buyback programme at $3 billion over the next three months.
Its integrated gas division delivered profits of $2.7 billion, up 55% from a year earlier, despite gas production falling 31% from the previous quarter.
Meanwhile, Shell’s chemicals and products business posted a significant turnaround, with profits jumping to $2.9 billion from $118 million a year earlier.
Looking ahead, the company forecast lower integrated gas production and upstream output in the third quarter due to increased maintenance activities across its refining and upstream assets.
Shell continues to face production challenges after an attack in March damaged one of the two processing trains at its Pearl gas-to-liquids plant in Qatar. The company said repairs could take about a year, while additional production from Canada, Nigeria, and Australia is helping offset the lost capacity.
The Middle East accounts for about 20% of Shell’s oil and gas production, with roughly half of that linked to Qatar.
The company also strengthened its balance sheet during the quarter. Net debt declined to $41.8 billion from $52.6 billion at the end of the first quarter, while its debt-to-equity ratio fell to 18.7% from 23.2%.
Higher commodity prices also supported earnings, with Brent crude averaging about $97 per barrel and benchmark European natural gas prices averaging €46 per megawatt-hour during the quarter.
