A sign displaying the prices of unleaded gasoline and diesel at a Shell gas station in Miami Beach, Florida. (Jack Bennett/Bloomberg)
Shell Plc said it delivered another strong oil and gas trading result in the second quarter as it benefited from market turmoil caused by the Iran war.
Oil trading profits came in line with strong first quarter levels, while gas trading results were “significantly higher,” the London-based energy giant said in a statement on July 7 ahead of earnings results later this month. Traders often make profits when the market is volatile.
Read more: 2 tankers attacked in latest attacks in Strait of Hormuz
The world’s top energy traders have profited from the Iran war as the conflict has caused unprecedented disruption to oil and gas supplies. Tanker companies also saw an increase in revenue from leasing their ships, as the conflict grounded ships inside the Persian Gulf and forced buyers to look further afield for cargo. While Shell, BP Plc and TotalEnergies SE, better known as oil majors, also have huge trading desks, helping them profit from the same turmoil.
Shell shares rose as much as 2.7% in London trading on July 7.
Shell’s trading update offers the first glimpse of how Big Oil fared in 2022 when crude prices hit their highest level since the attack on Ukraine, before Persian Gulf producers increased flows through the Strait of Hormuz. The performance of Shell’s global business operations is closely watched as it can be a major driver of earnings.
The price of Brent, the international benchmark crude oil, reached above $126 a barrel in late April. It is trading around $72, down more than 40% since late June.
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Shell’s natural gas output declined as production remained offline in Qatar, the Persian Gulf country representing about 10% of the company’s global oil and gas volumes. Still, Shell expects natural gas production output in the second quarter to be slightly higher than previously expected, thanks to its global portfolio.
“Strong trading performance is offsetting the weaker performance due to the Qatar disruption,” Barclays analyst Lydia Rainforth said in a note on July 7.
However, as the outlook for liquefied natural gas shipments through Hormuz remains uncertain, another tanker loaded with fuel off Qatar crashed on July 7.
Overall, Shell’s oil and gas production was within the forecast range for the second quarter due to production outside the Middle East.
Refining margins improved as the company and its partners work to process fuels such as jet and diesel to compensate for Middle East disruptions. Chemical margins also improved.
