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Shell is expected to report “significantly higher” profits from its commodity trading desks in the first quarter of this year after weeks of market volatility triggered by the Iran crisis.
The surge in energy commodity markets over recent weeks is expected to drive up trading results at Shell’s chemicals and products unit, which includes its main oil trading desk.
Shell’s trading windfall is expected to be particularly high in its renewable energy division. Earnings are expected to soar to between $200m (£149m) and $700m in the first quarter, from about $100m in the final quarter of last year, it predicted in a trading update on Wednesday.
Europe’s biggest oil and gas producer also expects lower gas production for the first quarter, compared with the final quarter last year, because of the impact of the Middle East conflict on its assets in Qatar.
Oil and gas markets recorded historic price rises after Iran retaliated to US-Israeli aggression by throttling energy trade through the strait of Hormuz and launching a volley of strikes against key energy infrastructure across the Gulf region.
These attacks included a strike that damaged Shell’s assets at the Ras Laffan liquified natural gas (LNG) complex in Qatar. The company expects its gas production to fall by about 5% to between 880,000 and 920,000 barrels of oil equivalent a day, compared with 948,000 in the fourth quarter.
The loss of Qatari production, combined with the impact of cyclone Narelle on Shell’s Australian production, will be partly offset by the ramp up of production from its LNG Canada venture.
Oil plunged below $100 a barrel on Wednesday after the US and Iran agreed to a two-week ceasefire, although market prices remain more than 50% higher than last year. Iran’s government has promised that the strait of Hormuz will temporarily reopen during this period to allow oil and fuel tankers into the global market.
Shell’s boss, Wael Sawan, warned last month that Europe could face a shortage of energy and fuel in April without a reopening of the strait. He told an industry conference in the US that the company was working with governments to help them address the oil and gas supply crisis, which has already led to energy rationing in Asian countries.
“South Asia was first to get that brunt. That’s moved to south-east Asia, north-east Asia and then more so into Europe as we get into April,” Sawan said.
