Shares in oil and energy titan Shell dropped sharply in early trading on Thursday, 8 January 2026, after the company warned of a weak performance in its crucial trading division and flagged a loss in its chemicals business.
Trading Division and Chemical Losses Drag Earnings
The FTSE 100-listed firm indicated that adjusted earnings for its chemicals and products division are not expected to break even for the final quarter of 2025. This anticipated loss was driven by weaker chemical margins, which slid to 140 US dollars per metric ton from 160 dollars in the previous quarter. The results were also impacted by an unfavourable tax adjustment.
Simultaneously, Shell reported that results from its energy trading arm are set to be "significantly lower" than in the third quarter. This double blow from two key operational areas spooked investors, leading to an immediate share price decline.
Broader Market Pressures and Political Instability
The downturn in Shell's trading performance coincides with a broader decline in crude oil markets. Brent crude prices have fallen by 18% over the past year, squeezing margins. Furthermore, the entire energy sector faces an uncertain backdrop due to potential volatility linked to political instability in Venezuela.
Analysts suggest that US involvement in the region could eventually help unlock Venezuela's vast oil reserves, adding another layer of complexity to future price forecasts and market dynamics.
Leadership Under Scrutiny for Future Growth
Russ Mould, investment director at AJ Bell, commented on the challenges. He noted that the weak oil trading results reflect lower crude prices, a trend exacerbated by the situation in Venezuela. More concerning, however, are the "entrenched problems" hinted at by the weak margins and big loss in Shell's chemicals division.
Mould added that following Shell's decision not to pursue a takeover of BP last year, CEO Wael Sawan may be under increased pressure in 2026 to clearly demonstrate where the company's next phase of growth will originate.
The market's reaction was swift, with Shell shares trading 2.7% lower in early trading. The company is scheduled to unveil its full-year results for 2025 in an update early next month, which will provide a complete picture of the year's financial performance.
