Shell’s profits took a hit this quarter, but not as bad as everyone expected.
On July 31, energy giant Shell (SHEL.L) reported that its second-quarter net profit tumbled nearly 32%, coming in at $4.26 billion, which is down from last year but well above analyst estimates of $3.74 billion.
What’s up with this dip, though? Well, oil prices fell, gas trading slowed, and a key chemical plant in the U.S. went offline. But the fact that Shell still managed to outperform expectations is worth unpacking. And unpack we shall.
In Q2, global oil prices dropped. The average Brent crude price hovered around $67 per barrel, compared to $75 in Q1 and $85 a year ago. This slide came as OPEC+ (including Russia) gradually increased production, adding 548,000 barrels per day in August.
Combine that with weak gas trading and a shutdown at Shell’s Monaca polymer plant, and you’ve got the perfect recipe for a profit slide.
Even with the headwinds, Shell managed to deliver a “robust set of results,” according to CFO Sinead Gorman.
Some of the key wins include $4.26 billion in adjusted earnings (vs $3.74B estimate), $11.9 billion in cash flow from operations (down from $13.5B in 2024), $3.5 billion in share buybacks (15 quarters in a row!), $2.1 billion in dividends, and $3.9 billion in cost cuts (towards a $5–$7B goal by 2028).
In total, 46% of operating cash flow was returned to shareholders through buybacks and dividends, which is right in line with Shell’s 40–50% target.
While LNG demand from Asia has been quiet, Shell’s leadership believes things could tighten post-summer. Europe used the downtime to refill reserves, but rising demand in colder months might shift dynamics fast.
CEO Wael Sawan is focused on strengthening Shell’s lead in global LNG trading, a market that’s becoming increasingly strategic in the transition era.
Nevertheless, Shell took a “risk-off” stance on oil trading this quarter. According to Gorman, the company noticed a disconnect between oil prices and actual supply-demand fundamentals, especially with geopolitical events like the brief price spike during the Israel-Iran tensions in June.
Despite the profit drop, Shell showed resilience, especially in how it’s managing shareholder returns and cutting costs. For investors, this signals that Shell can weather volatility without falling apart.
And for the broader energy market? The Q2 results highlight vulnerability to price fluctuations, the ongoing impact of OPEC+ decisions, and how global LNG demand may reshape Q3 and beyond.
