British energy heavyweight Shell has reported a surprise rise in annual profit, posting stronger earnings in 2025 despite falling oil and gas prices, market volatility, and mounting legal and climate pressures.
Shell said on Thursday that profit after tax climbed 11% to $17.84 billion in 2025, up from $16.1 billion the previous year, driven by higher production volumes and tighter cost controls.
The results come against a turbulent backdrop for global energy markets. Oil and gas prices were weighed down last year by fears that US President Donald Trump’s tariff policies could slow global economic growth, alongside increased output from OPEC+ producers, which added to supply pressures.
Prices briefly rebounded in recent weeks after Washington issued military threats against Iran, a major oil producer, before easing again as tensions between the two countries softened.
Earnings Slide as Market Volatility Bites
Despite the headline profit increase, Shell reported weaker underlying performance. Adjusted earnings, which exclude one-off items and smooth out energy price swings, fell 22% to $18.53 billion.
The final quarter of the year proved particularly challenging. Fourth-quarter net profit dropped 22% to $4.1 billion, reflecting softer energy prices and weaker demand.
Commenting on the results, chief executive Wael Sawan said Shell had still delivered solid cash flow.
“In Q4, despite lower earnings, cash delivery remained solid,” Sawan said.
He announced a dividend increase for shareholders and unveiled a new $3.5 billion share buyback programme, underlining the company’s commitment to investor returns.
Market Reaction and Analyst Verdict
Investors were unimpressed by the mixed results. Shell shares fell 1.9% on London’s FTSE 100, which itself slipped 0.5% on the day.
Market analyst Richard Hunter, head of markets at Interactive Investor, described the final months of the year as disappointing.
“The final quarter was one which Shell will want to forget, although the numbers for the year as a whole were slightly more palatable,” he said.
Hunter pointed to weak demand and oversupply, noting that oil price volatility continued to drag on performance.
Meanwhile, Brent crude, the global oil benchmark, dropped 1.6% to $68.33 per barrel on Thursday.
Shift Away From Renewables
Shell’s earnings update follows a strategic pivot announced late last year. In November, the company confirmed it was pulling out of two offshore wind projects in the North Sea, signalling a sharper focus on its oil and gas operations.
In an online video released on Thursday, Sawan said the company had entered 2026 in a stronger position.
“We have entered 2026 as a more resilient organisation,” he said, adding that Shell had improved operational discipline while aiming to “deliver more value with less emissions.”
The company is now prioritising cost reductions, AI-driven efficiency gains, and a higher-return portfolio, even as it scales back some climate targets—mirroring similar moves by industry rivals.
Legal Pressure Over Climate Impact
Shell’s year-end was also overshadowed by fresh legal action in the UK. Survivors of Typhoon Rai, which devastated parts of the Philippines in December 2021, have filed a lawsuit against the company, seeking compensation for climate-related damage.
The typhoon killed more than 400 people, destroyed infrastructure, and displaced hundreds of thousands. The case, brought by law firm Hausfeld on behalf of 103 survivors, argues that Shell’s carbon emissions contributed to climate change and worsened the disaster’s impact.
Industry Watch
Shell’s British rival BP is due to release its 2025 earnings next week and has already warned of write-downs of up to $5 billion linked to its energy assets, underscoring the pressure facing major oil firms amid volatile markets and shifting climate priorities.
