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.

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The Saudi Ministry of Defence stated the strikes came “in response to recent drone attacks” and that Saudi air defences had “intercepted and destroyed several drones that attempted to target petroleum facilities in the Eastern Province and Riyadh regions…. launched from Iraqi territory and carried out by Iran-aligned terrorist militias.” The kingdom’s statement concluded with a measured warning: “The Kingdom emphasizes that it does not seek escalation but will respond to any aggression it faces.”

US Central Command officials reported that the operation responded directly to more than 30 aerial drone attacks launched by the militias over the preceding 72 hours. American military sources noted that advanced defense systems successfully thwarted these hostile strikes, which targeted US personnel stationed in the region alongside critical Saudi petroleum infrastructure essential to global energy markets. The coordinated military response specifically focused on Iran-aligned groups directed and funded by the Islamic Revolutionary Guard Corps.

Iran-Backed Groups Deny Involvement and Issue Threats

The Islamic Resistance in Iraq, a self-proclaimed armed resistance group backed by Iran, categorically denied any role in the attacks on Saudi Arabia. The organization dismissed Saudi claims as “fabrications” and warned that “any foolish Saudi action will be met with a harsh response.” This outright denial creates further uncertainty about responsibility for the drone campaign that prompted the retaliatory strikes.

The PMF, which operates under Iraqi law as part of the country’s official security forces and reports directly to the commander-in-chief-who is also the prime minister-characterized the strikes as a “highly dangerous escalation” and a violation of Iraq’s sovereignty. The statement condemned what it described as attacks on official Iraqi security institutions, despite the targeted groups’ documented links to Tehran and their history of conducting unauthorized operations beyond Baghdad’s control.

Social media reports documented continued explosions at an ammunition depot belonging to Iran-backed militias in Ad Dayr, Basra Governorate, where secondary detonations persisted following the initial strike. The extensive nature of the explosions suggested significant weapons stockpiles at the targeted facility, underscoring the scale of military infrastructure these groups maintain on Iraqi soil.

Long-Standing Tensions Over Militia Control

The issue of the PMF has remained contentious between the Iraqi government and the United States, as well as neighboring countries, for years. While Iraqi law formally integrates the PMF into national security forces, previous Iraqi governments failed to rein in the power of these armed groups, which have struck the US embassy in Baghdad and military bases across Iraq at will. These militias frequently refuse government or military orders, operating with de facto autonomy despite their nominal position within Iraq’s command structure.

The militias’ pattern of attacking American positions and regional allies while claiming official status within Iraq’s security apparatus creates diplomatic complications for Baghdad. Iraqi Prime Minister Ali al-Zaidi, who ordered domestic security agencies to investigate the cross-border drone attacks days before the strikes, faces pressure to demonstrate control over groups that formally answer to his authority but operationally follow Iranian direction. Al-Zaidi emphasized in public statements that Baghdad remains strictly committed to preventing its sovereign territory from serving as a staging ground for proxy attacks against neighboring or friendly nations.

Regional Implications and Diplomatic Responses

Prime Minister al-Zaidi is expected to travel to Saudi Arabia on Thursday, a diplomatic visit that takes on heightened significance following the military escalation. The timing of this trip, scheduled just days after he ordered investigations into the drone attacks and immediately after the retaliatory strikes, will test Baghdad’s ability to balance relationships with both Washington and Riyadh while managing powerful militias with allegiance to Tehran.

The Saudi government explicitly stated on social media that the “terrorist attempts were launched from Iraqi territory and carried out by Iranian-backed terrorist militias,” demanding accountability from Baghdad. This public attribution places additional diplomatic pressure on Iraq’s government to take concrete action against groups that formally operate under its command structure but pursue Iran’s regional agenda. The kingdom’s statement simultaneously defended its right to self-defense while expressing reluctance for further escalation-a delicate balance aimed at justifying the strikes without triggering wider conflict.

Strategic Energy Infrastructure Under Threat

The targeting of petroleum facilities in Saudi Arabia’s Eastern Province represents a significant threat to global energy supplies, given the kingdom’s central role in world oil markets. The drones attempted to strike infrastructure in both the oil-rich Eastern Province and the capital region of Riyadh, demonstrating the militias’ intent to target both economic assets and political centers. Saudi air defense systems successfully intercepted these attacks, preventing potential disruptions to energy production that could have reverberated through international markets.

The failed drone campaign over the 72-hour period preceding the strikes showed both the scope of militia capabilities and the effectiveness of Saudi-American defensive coordination. Advanced defense systems deployed by both nations proved capable of neutralizing the aerial threat, though the volume of attacks-more than 30 drones-indicated sophisticated planning and substantial resources behind the operation.

This recent violent escalation abruptly interrupts what had been a brief, cautious lull in regional hostilities following several intense weeks of military activity. The joint US-Saudi response signals determination to impose costs on Iran-backed groups conducting cross-border attacks, while the militias’ defiant statements suggest this cycle of strike and counter-strike may continue. How effectively Prime Minister al-Zaidi can assert control over these nominally Iraqi forces during his upcoming Saudi visit may determine whether this episode represents an isolated flare-up or the beginning of sustained regional instability centered on Iraq’s inability to control powerful armed groups within its borders.

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President Donald Trump issued an urgent call on Monday for Israel and Iran to “immediately” stop “shooting” after the two nations traded strikes for the first time since a ceasefire came into effect in the Middle East in April. The exchange of fire marks a dramatic escalation that threatens to unravel months of relative calm in the region. Trump’s directive came via his Truth Social platform, where he posted a terse message demanding an end to the military confrontation between the longtime adversaries.

The Israeli Defense Forces confirmed it carried out a “large-scale strike on strategic defense systems” on Monday, according to its X account, responding to Iranian missile launches on Sunday. The IDF announced it had struck military targets belonging to the Iranian terror regime in western and central Iran a short while after the Iranian attack. The confrontation represents the first direct military exchange between the nations since the April agreement took hold, raising fears of a broader regional conflict.

The White House confirmed to MS NOW that Trump had been briefed on the renewed fighting, with Axios first reporting the briefing. Axios later reported that Trump intended to call Israeli Prime Minister Benjamin Netanyahu to urge him not to strike back, though this call came before Israel’s retaliatory strikes were launched. The timing suggests the administration’s efforts to prevent escalation failed to stop the Israeli military response.

Iranian Officials Cite Ceasefire Violations as Justification

Iranian Parliamentary Speaker MB Ghalibaf posted to X on Sunday that the U.S. “naval blockade and violation of agreements regarding Lebanon” amount to violations of the ceasefire. He declared that the military activity in Lebanon and the ongoing U.S. blockade made “American and regime bases and assets in the region into legitimate targets,” according to a translation on X. This statement signals Iran’s willingness to expand the conflict beyond direct Israel-Iran hostilities to include American military installations throughout the Middle East.

In Tehran, Iranian Foreign Ministry spokesman Esmail Baghaei told journalists on Monday that the U.S. was “responsible for the consequences of any escalation,” according to the AP. This assertion places direct blame on Washington for the breakdown of the ceasefire arrangement. Iran’s Islamic Revolutionary Guard Corps stated that the ceasefire conditioned a cease-fire on all fronts, suggesting Tehran believed the agreement encompassed more than just direct Israel-Iran military confrontations.

“Tonight’s operation was a warning, and if aggressions are repeated, the responses will be broader,” the statement from Iran’s Islamic Revolutionary Guard Corps read.

Defense Systems Activated Amid Missile Threats

The IDF posted on X Monday morning that it had “identified that missiles were launched from Iran toward the territory of the State of Israel a short while ago.” Israeli defensive systems activated to intercept the threat, according to the military’s statement. The Associated Press reported Sunday that Israel said Iran had launched missiles at it, and the Israeli Defence Forces said they were operating defensive systems after identifying the missiles. The successful activation of Israeli missile defense systems prevented what could have been catastrophic damage from the Iranian strike.

The missile exchange unfolded rapidly, with Iranian launches on Sunday prompting Israeli defensive measures followed by Monday’s large-scale retaliatory strikes. The speed of escalation demonstrates how quickly regional tensions can explode into active military conflict despite ceasefire arrangements. Defense analysts noted that both nations demonstrated significant military capabilities in the exchange, with Iran showing its ability to launch missiles toward Israeli territory and Israel proving it could strike deep into Iranian territory with precision.

Conflicting Ceasefire Interpretations Emerge

Iranian officials maintained that the deal obligated all sides to cease military activity across multiple fronts, including Lebanon. In contrast, Israeli and American sources suggested a narrower interpretation focused primarily on direct Israel-Iran hostilities. This fundamental disagreement about what the April agreement actually required from each party now lies at the heart of the breakdown. The differing interpretations suggest that the ceasefire may have been built on ambiguous terms that each side understood differently from the outset.

The dispute over Lebanon became a particular flashpoint, with Iran viewing U.S. and Israeli military activity there as direct violations of the ceasefire terms. Iranian officials appear to have expected a complete cessation of military operations across the broader Middle East, including activities involving Iranian-backed forces in Lebanon. Meanwhile, American and Israeli officials evidently believed the agreement applied more specifically to direct military confrontations between the two principal adversaries.

Diplomatic Efforts Face Mounting Challenges

Trump told Fox News on Sunday that the missile attacks are “certainly not going to help negotiations.” His comment acknowledges that the military escalation complicates ongoing diplomatic efforts to maintain stability in the region. The President’s public statement reflects frustration that diplomatic progress has been undermined by the renewed military confrontation. A White House official, granted anonymity to speak candidly, told MS NOW that recent negotiations with Iran faced new obstacles following the breakdown.

The administration now faces difficult choices about how to respond to the escalation while attempting to preserve any remaining diplomatic channels. Trump’s call for both sides to stop shooting represents an attempt to freeze the conflict before it expands further, but the effectiveness of such appeals remains uncertain. The President’s direct message to both nations carries weight, yet neither Israel nor Iran has immediately indicated compliance with his demand for an end to military strikes.

Regional Implications and Future Outlook

The breakdown of the April ceasefire raises serious questions about the stability of diplomatic agreements in the Middle East, particularly when fundamental terms remain subject to vastly different interpretations. Regional observers note that the speed with which both nations returned to military confrontation suggests the underlying tensions never truly subsided during the ceasefire period. Instead, both sides appear to have maintained their military readiness and willingness to strike when they perceived violations of the agreement terms.

The international community watches closely to see whether Trump’s appeal will halt the escalation or whether the region faces a broader military conflict. The involvement of American naval forces and the presence of U.S. military bases throughout the region means Washington cannot remain a distant observer to any expanded confrontation. As both Israel and Iran possess sophisticated military capabilities, any sustained conflict could have devastating consequences for regional stability and global security interests.

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