Shell\’s Net Profit Declines as Energy Prices Drop

Shell reports 23 % drop in first‑half net profit amid falling oil and gas prices

British energy giant Shell announced on Thursday that its pre‑tax earnings fell by 23 % to $8.4 billion in the first six months of the year, compared with $10.9 billion in the first half of 2024. Group revenue slipped nearly nine percent to $136.6 billion.

Key drivers of the decline

• Lower realised liquids and gas prices – Shell said that the main reason behind the profit drop was the sharper decline in realised oil and gas prices.
• Less favourable macro environment – Chief executive Wael Sawan described the business environment in the reporting period as “operating in a less favourable macro environment”.

Market backdrop

Energy prices have come under pressure in recent months due to concerns that U.S. President Donald Trump’s tariffs could hurt economic growth, while OPEC+ has increased oil production. Sawan added that “against a backdrop of geopolitical and economic uncertainty we saw knock‑on effects on both physical trade flows as well as commodity prices and margins more broadly.”

Performance highlights

Despite the challenges, Shell delivered a robust set of results, with strong operational performance. Adjusted earnings beat market expectations, lifting the share price by 2.5 % in early London trade. The stock received additional support from the latest dividend payment and the announcement of a $3.5 billion share repurchase.

Analyst perspective

Keith Bowman, equities analyst at Interactive Investor, noted that “Shell’s diversity of operations across oil, gas, chemicals, and retailing regularly allows one area of strength to counter another of weakness.” He cautioned that “heightened geopolitical tensions and potential for operational disruption remain an investor concern.”

Cost‑saving and shareholder‑return strategy

In March, Shell announced plans to slash costs by billions of dollars and increase shareholder returns, with a focus on its liquified natural gas (LNG) business. The company aims to reduce costs by between $5 billion and $7 billion by 2028, compared with 2022 levels. Savings to date stand at $3.9 billion, Sawan noted Thursday. The previous target had been for savings of between $2 billion and $3 billion by the end of 2025, involving hundreds of job cuts across the oil and gas division.

Gas as a cleaner fossil fuel

Gas is being touted by energy companies as cleaner than other fossil fuels as countries worldwide strive to reduce emissions and slow global warming.

BP’s recent pivot

Earlier this year, Shell’s British rival BP launched a major pivot back to its oil and gas business, shelving its once industry‑leading ambitious renewable energy strategy. BP is publishing its latest earnings on Tuesday.