Shell reported a 106% profit jump to $6.9bn in the first quarter of 2026, a surge the company attributes directly to the disruption and volatility unleashed by the Iran war. The figure, which more than doubled the $3.256bn earned in the final three months of 2025 and sharply exceeded the $5.577bn posted in the same period a year earlier, was driven by higher oil and gas prices, fatter refining margins and a substantial boost from its trading division. Campaign groups immediately labelled the windfall “indefensible”, with Greenpeace calculating that Shell made $53,241 per minute of profit over the quarter.
Shell’s own explanation of the earnings jump makes explicit the link to the conflict in the Middle East. The company pointed to “higher contributions from trading and optimisation mainly impacting our Downstream, Renewables and Energy Solutions businesses, higher realised prices, higher refining margins, lower operating expenses and higher Lubricants margins, partly offset by lower volumes.” The war has pushed Brent crude above $100 a barrel for extended periods, widened refining margins as supply routes are disrupted, and created lucrative opportunities for energy traders able to move cargoes around a fractured market. At the same time, the closure of the Strait of Hormuz – through which a fifth of the world’s oil and gas normally passes – has constrained supply and sent shipping costs soaring. Danish giant Maersk reported that fuel costs have nearly doubled since the start of the conflict, adding an estimated $500m a month to its own expenses, and warned that traffic through the strait “remains at a near standstill”.
Yet the profits came despite significant damage to Shell’s own production assets. On 18 March, an Iranian missile strike hit Ras Laffan Industrial City in Qatar, causing “extensive damage” to one of the two processing trains at Shell’s Pearl gas-to-liquids facility, a plant considered a crown jewel of its downstream portfolio. Shell said today that full repairs will take around a year. Analysts have estimated the damage could cost the company up to $750m in lost revenue. QatarEnergy, the state-owned partner, confirmed that its liquefied natural gas facilities were also hit, with two of its 14 LNG trains knocked out of service; repairs there could take three to five years and may trigger force majeure declarations on some long-term contracts. Despite these blowbacks, Shell’s integrated model allowed trading and refining to more than offset the production losses.
Shareholders are the immediate beneficiaries. Shell raised its quarterly dividend to $0.3906 a share, up from $0.3580 in the first three months of 2025, and announced a new $3bn share buyback programme authorised to run until 24 July. In the preceding quarter, the company returned $5.3bn to investors through dividends and buybacks. Even so, the dividend remains below the $0.47 per share paid in the first quarter of 2019. Mark van Baal, chief executive of the Follow This campaign, warned that “windfall profits are the result of war, not strategy”, and questioned how Shell would create value when fossil fuel demand enters structural decline. Friends of the Earth’s Danny Gross called the profits “monstrous” and argued that households and drivers were being squeezed to enrich oil companies, while Maja Darlington of Greenpeace UK said the “fossil fuelled economy” was rigged to pass the costs of “endless wars and limitless pollution” onto consumers. Anne Jellema, executive director of 350.org, urged governments to tax excess profits and use the revenue to expand affordable renewable energy. Shell also said net debt stood at $52.6bn with gearing at 23.2%, and that it is advancing a $13.6bn acquisition of Canadian gas producer ARC Resources.
Central Banks Respond
The inflationary pressure from the Iran war is now forcing central banks to adjust policy. Norway’s Norges Bank raised its policy rate from 4% to 4.25% today, citing “unexpectedly high” inflation that has run above target for several years and the risk that higher oil and gas prices will accelerate price rises further. Governor Ida Wolden Bache said the monetary policy outlook had not changed materially since March but that “the war in the Middle East is still causing substantial uncertainty about the economic outlook”. The bank’s revised forecast indicates the rate could rise to between 4.25% and 4.5% by the end of 2026. Sweden’s Riksbank, by contrast, held its key rate at 1.75% while it assesses the damage. It acknowledged that “the risk that the war in the Middle East will lead to higher inflation has increased somewhat” but noted that inflation is currently below target, recent outcomes were lower than forecast, and economic activity is weak. This gives the bank “scope to wait until there is a clearer picture of the effects of the war and the supply shocks it entails.”
Meanwhile, the UK’s FTSE 100 fell 58 points (0.55%) in early trading on Thursday, dragged lower by energy shares, even as European markets rose. Germany’s DAX gained 0.4% and France’s CAC 40 added 0.7%, lifting the pan-European Stoxx 600 index by 0.2%. The divergence reflected a sharp drop in oil prices on mounting hopes of a peace deal. Brent crude fell around 3% to $98.30 a barrel, back below the $100 mark and approaching the two-week lows hit the previous day. Japanese markets surged after the Golden Week holiday, with the Nikkei 225 jumping 5.7% to end at a new closing high of 62,833 points, a 24% gain for the year so far. South Korea’s KOSPI rose 1.4% and Australia’s S&P/ASX 200 gained 1%. The previous day, the FTSE 100 had surged 2.15% and the S&P 500 hit a record high, while oil plunged almost 8%.
In the UK energy sector, Centrica completed the purchase of the Severn gas power plant in South Wales from Calon Energy for approximately £370m. The 850MW plant, described as one of the most efficient in the UK, can ramp up power at short notice to balance the grid when renewable output fluctuates. Centrica expects it to generate average capacity market payments of £35m annually until 2030 and annual EBITDA of £30-60m from 2027. Chief executive Chris O’Shea said the asset will play “a critical role” in stabilising the electricity system as the UK pursues its Clean Power 2030 target of at least 95% low-carbon electricity. The plant had been in administration since 2020 before its directors regained control in 2021.
Peace Talks and Market Volatility
The oil price slide that helped fuel market gains stems from a sudden burst of optimism about a negotiated end to the Iran war. US president Donald Trump said on Wednesday that a deal was “very possible” after “very good talks” over the preceding 24 hours, telling Fox News he was “cautiously optimistic” and believed the war had “a very good chance of ending” by next week. Markets seized on a report from Axios that the US had sent a one-page proposal through Pakistan aimed at ending the conflict and gradually reopening the Strait of Hormuz, with a framework for subsequent nuclear negotiations. According to details cited by Deutsche Bank strategist Jim Reid, the proposal would include a moratorium on nuclear enrichment by Iran, US sanctions relief and the release of billions in frozen Iranian funds, and mutual lifting of restrictions around the strait.
But the feasibility of a quick breakthrough is far from assured. Iran is expected to respond via Pakistan within the next two days, and nuclear talks could follow later. However, the country’s state news agency ISNA reported that Tehran is still reviewing the US proposal, and the spokesperson for the Iranian parliament’s national security and foreign policy commission dismissed it as “an American wishlist, not a reality”. Saxo’s Strategy Team noted that markets had priced in lower risk of prolonged disruption on Wednesday, but added that “it’s not yet clear that Trump has found a way to end the conflict”. Senior equity analyst Matt Britzman of Hargreaves Lansdown observed that “global markets are still pricing the glass as half full, with yesterday delivering another strong rally despite little tangible progress towards a lasting resolution”. Stephen Innes, managing partner at SPI Asset Management, described the rally as “a full-blown global melt-up” where traders embraced the idea that the war was shifting “from missile trajectories to negotiation tables”.
