Dan Coatsworth, head of markets at AJ Bell, said: “While the big increase in energy prices should boost Shell’s profit, the company also has a significant operational footprint in the Middle East which has been disrupted by the fighting.
“This dichotomy is reflected in Shell’s latest update, with gas production hit by this disruption but refining margins and oil trading revenue seeing an uplift.
“Inevitably, Shell’s shares have slipped lower this morning as markets react to news of a ceasefire between the US and Iran.
“The net result of this outcome being that oil and gas prices are falling, albeit they are still materially higher than pre-war levels.
“Shell has as much control over the trajectory of the price of its core products as King Canute had over the rising tide.
“The sheer volatility in commodity markets is reflected in wild swings in Shell’s working capital and, for all the benefit the company might enjoy from elevated energy markets, it comes with complications and headaches too.
“To set itself on a sustainable path, Shell needs to look through the short-term noise and work out how it will deliver growth over the long term.
“Chief executive Wael Sawan has won praise for the discipline injected into Shell’s business model, but his next job is working out how to replenish a reserve base which has been diminished by disposals and reduced spending.”
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