Shell Q1 Profit Surges to Two-Year High as Dividend Rises Despite War-Driven Debt Pressure

Shell reported stronger-than-expected first-quarter earnings, posting its highest quarterly profit in two years as volatility linked to the Middle East conflict boosted trading gains. The energy giant announced adjusted earnings of $6.92 billion, surpassing analyst expectations of $6.36 billion and improving significantly from $5.58 billion recorded during the same period last year.

The company also revealed a 5% increase in its dividend, signaling confidence in long-term shareholder returns. However, Shell reduced its quarterly share buyback program to $3 billion from the previous $3.5 billion, aiming to preserve cash and strengthen its balance sheet amid ongoing supply disruptions tied to the U.S.-Israeli conflict involving Iran.

Despite the earnings beat, Shell shares fell nearly 2% in early European trading, reflecting broader weakness in oil prices and energy stocks. Investors also reacted to rising debt levels and operational challenges caused by geopolitical tensions in the region.

Shell confirmed that oil and gas production declined by 4% compared to the previous quarter. The company has also been impacted by damage connected to the conflict, including disruptions at Qatar’s Pearl gas plant, where repairs could reportedly take up to a year.

The company’s gearing ratio, which measures debt relative to equity, increased to 23.2% from 20.7% at the end of 2025. Shell previously stated that it was comfortable maintaining the ratio around 20%, but recent market instability and supply chain volatility pushed borrowing levels higher.

Operating cash flow came in at $6.1 billion, affected by sharp swings in inventory values. Working capital also dropped to negative $11.2 billion, highlighting pressure on short-term liquidity. Shell expects these working capital movements to improve if oil and gas prices stabilize in the coming months.