Shell reports robust oil and gas trading amid war-driven market volatility

London-based energy giant Shell Plc has reported strong oil and gas trading results for the second quarter, driven by market volatility stemming from the ongoing Iran war. The company’s trading profit matched the robust first-quarter performance, while gas trading results were “significantly higher,” according to a July 7 statement released ahead of its full earnings report later this month. Traders typically benefit from volatile markets, and the Iran conflict has created unprecedented supply disruptions, leading to a profit surge for top energy merchants worldwide. Tanker companies also saw revenue from ship leasing surge as the war trapped vessels in the Persian Gulf, forcing buyers to source cargoes from farther afield. While Shell is best known as an oil major, its vast trading operations—alongside peers like BP Plc and TotalEnergies SE—have capitalized on the turmoil. Shell’s shares rose as much as 2.7% in London trading on July 7. The trading update provides an early look at how Big Oil performed during a quarter marked by crude prices hitting their highest levels since the 2022 Ukraine invasion before plummeting as Persian Gulf producers increased flows through the Strait of Hormuz. Brent crude, the international benchmark, surged above $126 per barrel in late April but has since fallen over 40%, trading around $72 as of late June. Shell’s natural gas production took a hit due to Qatar’s offline output, which accounts for roughly 10% of the company’s global oil and gas volumes. However, Shell expects slightly higher natural gas production in Q2 than previously forecast, thanks to its diversified global portfolio. “The strong trading performance is offsetting the weaker performance due to Qatar disruption,” Barclays analyst Lydia Rainforth noted in a July 7 research note. The outlook for liquefied natural gas shipments through the Strait of Hormuz remains uncertain after another Qatari tanker was struck on July 7. Despite the Qatar-related setback, Shell’s overall oil and gas production for Q2 fell within its projected range, buoyed by output outside the Middle East. Refining margins improved as Shell and its competitors pivoted to processing fuels like jet fuel and diesel to compensate for Middle East supply chain disruptions. Chemicals margins also saw gains.