Shell plc said on Wednesday that weaker first-quarter gas production and a short-term liquidity squeeze could weigh on its results, although stronger oil trading may partly offset the impact.
The company said the disruptions come amid heightened volatility in global energy markets following the U.S.-Israeli war with Iran, which has pushed crude prices sharply higher.
Global benchmark Brent crude surged to nearly $120 per barrel after strikes on Iran began in late February and Tehran shut the Strait of Hormuz, a key global oil transit route.
The conflict also affected Shell’s operations in the Gulf, including damage to its Pearl gas facility in Qatar, where repairs could take about a year.
Shell said extreme commodity price swings caused major shifts in inventory values, pushing its working capital to between negative $10 billion and negative $15 billion during the quarter.
The company added that these working capital pressures are expected to reverse if oil and gas prices stabilise.
Analysts at RBC Capital Markets said the sharp swing highlights unusually volatile market conditions but noted Shell’s balance sheet remains strong enough to absorb the shock.
RBC raised its first-quarter net income estimate for Shell by 7% to $6.8 billion and projected operating cash flow, excluding working capital, to rise 31% to $17.1 billion.
Analysts at UBS also lifted their forecasts, expecting net income to reach $6.9 billion and operating cash flow to climb about 30%.
Shell, however, lowered its integrated gas production outlook to 880,000–920,000 barrels of oil equivalent per day, while forecasting stronger earnings from oil trading, fuel marketing and its renewables and energy solutions business.