Europe’s tumbling gas prices caused profits at Shell to slump by almost a third in the last quarter, after denting the earnings in its gas trading business. Gas prices in Europe fell by almost a fifth between April and June after a ceasefire between Iran and Israel eased fears of disruption to deliveries via the Strait of Hormuz.
Shell’s adjusted earnings for the second quarter fell to $4.26bn (£3.22bn), down almost a third from last year. The company attributed the drop to “lower trading and optimisation margins” and lower oil and gas prices. Brent crude was trading below $68 a barrel at the end of the quarter, down from more than $86 a year earlier.
Despite the fall, profits were higher than City forecasts of $3.7bn, allowing Shell to continue handing out bumper payouts to shareholders. It announced a $3.5bn share buyback programme for the third quarter. Chief executive Wael Sawan said the company delivered a strong operational performance in “a less favourable macro environment”.
The weaker gas prices, while challenging for Shell, have meant lower bills for households. In the UK, the energy price cap fell by 7% from July and is expected to remain at a similar level from September. Analysts at Hargreaves Lansdown noted that a recent rise in oil prices should help Shell’s performance improve in the third quarter.
Environmental campaigners continue to criticise Shell’s profits. Robin Wells of Fossil Free London said: “Climate scientists have warned us that this new normal will spell the end of human civilisation by 2100. It’s time for destruction to stop raising billions in profit.”
