Shell reported a significant drop in profits for the first quarter on Friday, as crude oil prices weakened due to geopolitical uncertainty. The FTSE 100 oil behemoth posted adjusted earnings of $5.58bn (£4.2bn) for the initial three months of the year.
Although this exceeded analyst predictions of $4.96, it represented a considerable decline from the $7.73bn reported for the same period last year. Shares in the energy company increased by over two per cent during early trading on Friday, as reported by .
Crude oil hit a quarterly high on January 15, prior to President Donald Trump's inauguration, at $82 per barrel. However, it fell in the subsequent months and settled around $75 on March 31.
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The reporting period narrowly missed Trump's sweeping 'Liberation Day' tariffs on trading partners, which caused oil prices to plummet. A barrel's price dropped below $60 in the aftermath of Trump's unpredictable trade policy.
Shell's cash flow from operations decreased to $9.28bn in the first quarter, down from $13.6bn in the previous period. Meanwhile, net debt rose to $41.52bn, up from $38.81bn in the fourth quarter.
Mark Crouch, market analyst for eToro, commented: "Despite sizable losses across the energy sector, Shell smashed analysts' expectations by over $1bn in the first quarter as strict capital discipline, a hallmark of Shell, continues to drive strong shareholder returns and insulate the business from market shocks.
"Falling oil and gas prices, OPEC production increases, and tariff volatility have weighed heavily on producers. But for Shell, whose profits jumped to $5.6bn, strategic execution and a clear identity has delivered in droves."
Shell announces another buyback
Shell demonstrated robust performance in integrated gas with earnings of $2.4bn and upstream at $2.34bn.
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The company reported a loss of $42m on renewables and energy solutions.
The firm unveiled a $3.5bn share buyback scheme, which it plans to complete over the next three months. This marks Shell's 14th consecutive quarter of at least $3bn in buybacks.
It further stated that total shareholder distributions paid over the last four quarters were 45 per cent of cash flow from operations, aligning with its 40-50 per cent policy.
Wael Sawan, Shell's chief executive, described the earnings as "another solid set of results."
He added: "Our strong performance and resilient balance sheet give us the confidence to commence another $3.5 billion of buybacks for the next three months, consistent with the strategic direction we set out at our Capital Markets Day in March."