Shell Reports $9.84 Billion Q2 Profit as Middle East Conflict Drives Oil Prices Higher

British energy giant Shell delivered a powerful second-quarter performance on Thursday, posting adjusted earnings of $9.84 billion for the April to June period. The result comfortably surpassed analyst expectations of $8.79 billion compiled by LSEG, while a separate company-provided forecast had predicted $8.92 billion. The oil major credited surging oil and gas prices driven by the sprawling Middle East conflict for the impressive figures.

The quarterly result represents Shell’s strongest performance since the second quarter of 2022, when the company reported earnings of $11.47 billion as oil and gas prices soared following Russia’s full-scale invasion of Ukraine. Shell reported adjusted earnings of $4.26 billion over the same period last year and $6.92 billion over the first three months of 2026. The first-half profits reached $16.75 billion, marking a 70% lift compared to the previous year.

CEO Wael Sawan addressed the results during an appearance on CNBC’s “Squawk Box Europe” on Thursday, emphasizing his company’s strategic approach to market turbulence. Volatility has become the defining characteristic of today’s energy markets, he acknowledged, but Shell has positioned itself to thrive amid uncertainty.

Operational Excellence Drives Performance Beyond Price Gains

“Volatility is the new normal. What we have been trying to build is a company that is able to thrive through volatility. So, you’re absolutely right, of course, the macro is such that the commodity prices are high and that provides a very strong tailwind for our results,” Sawan said.

The CEO highlighted two controllable factors that underpin Shell’s success beyond favorable commodity prices. First, the company demonstrated outstanding operational performance across every business segment, which created the foundation for the second critical element. That second factor centers on very strong trading and optimization capabilities, which allowed Shell to maximize value from volatile market conditions.

The company delivered $21.4 billion in cash flow from operations, supported by higher realized prices across its portfolio. Net debt declined significantly to $41.75 billion, down from $52.6 billion at the end of the first quarter. Shell maintained its capital expenditure outlook for 2026 unchanged at a range of $24 billion to $26 billion.

Shareholder Returns Continue at Steady Pace

Shell announced it would maintain the pace of its share buyback program at $3 billion over the next quarter, demonstrating confidence in its financial position and commitment to returning value to investors. London-listed shares of Shell rose 1.5% on Thursday morning following the announcement. The stock has jumped around 21% so far this year, although the company lags behind competitors including Britain’s BP and France’s TotalEnergies, as well as U.S. majors Exxon Mobil.

The bumper results arrive as energy majors across the globe receive a profit boost from soaring fossil fuel prices amid the Iran war. The United States launched its first airstrike in the Middle East on Wednesday since pausing its bombing campaign the previous week. U.S. Central Command described the strikes as a “powerful response” to Tuesday’s attempted Iranian attacks on American forces stationed in the Middle East region.

Middle East Conflict Creates Price Volatility and Supply Concerns

Oil and gas prices have experienced significant volatility amid disruption to production and deliveries from the Middle East since March. Brent crude oil currently trades at $91 a barrel, almost $20 higher than pre-war levels but well below the peak above $120 seen in April. UK gas costs for future delivery have climbed almost 70% higher than they were this time last year, threatening a further surge in household energy bills without a peace deal.

The on-off nature of hostilities has created persistent uncertainty in wholesale energy markets, though oil prices have received support from the release of international reserves. These strategic releases help offset the loss of supplies through the Strait of Hormuz shipping route, which typically handles a fifth of global shipments. The waterway off the Iranian coast also borders Oman and represents a critical chokepoint for global energy supplies.

Production Challenges and Strategic Reserve Concerns

Despite the profit surge, Shell faced operational headwinds including a 31% reduction in its gas production volumes. The decline stemmed from the loss of output following an Iranian attack on Shell’s assets at Qatar’s main liquefied natural gas facility in March. Shell’s finance chief signaled rising concern on Thursday over the erosion of strategic oil stockpiles, warning they were not “finite” resources.

Sinead Gorman suggested there may be “fewer levers to pull” in the months ahead as output increases elsewhere fail to compensate for the supply gap. The black hole in global supplies risks widening further as shipments from Saudi ports in the Red Sea come under attack from Houthi rebels operating in support of Iran. This additional disruption compounds existing supply chain challenges facing the global energy sector.

Political and Environmental Criticism Intensifies

The exceptional profit figures drew sharp criticism from environmental campaigners and political observers. Rudy Schulkind, political campaigner for Greenpeace, urged greater progress toward renewable energy transition while reacting to Shell’s earnings announcement.

“We’re running out of words to describe the obscenity of these numbers,” Schulkind said, as concerns mount over energy costs ahead of winter.

In the UK, rising energy costs present mounting concerns as winter approaches and fossil fuel firms continue focusing on maximizing shareholder value. Successive British governments have acknowledged that oil and gas will maintain a role in the country’s energy security for decades to come, despite rising investment in renewables such as wind and solar. These alternative energy sources play an increasing role within the national energy mix, though fossil fuels remain critical to meeting baseload demand.

Rival BP reports its quarterly progress next week and industry observers expect the company to reveal a similar profit trend driven by elevated commodity prices. The broader energy sector continues navigating the complex balance between meeting immediate energy security needs, delivering shareholder returns, and progressing toward longer-term decarbonization goals amid geopolitical turbulence.