Shell said on Wednesday that weaker first-quarter gas output and a hit to short-term liquidity would be offset partly by stronger oil trading, offering an early glimpse into how the U…
Shell said on Wednesday that weaker first-quarter gas output and a hit to short-term liquidity would be offset partly by stronger oil trading, offering an early glimpse into how the U.S.-Israeli war on Iranis reshaping oil majors' earnings.
Global benchmark Brent crude climbed to multi‑year highs near $120 a barrel after U.S.-Israeli strikes on Iran began in late February, followed by Tehran’s closure of the Strait of Hormuz and attacks on Gulf neighbours, including Shell's Qatari Pearl gas production plant, where repairs may take about a year.
Shell said commodity price volatility caused large swings in inventory values, pushing working capital - a liquidity measure of current assets minus liabilities - to between minus $10 billion and minus $15 billion in the quarter.
Shell said it expected working capital movements to reverse over time if oil and gas prices ease.
Unusual Current Market Conditions
RBC analysts said the scale of the swing underscored how unusual current market conditions have become, but added Shell’s balance sheet should absorb the shock.
RBC raised its net income estimate for Shell's first quarter by 7% to $6.8 billion, and expects a 31% jump in operating cashflow, excluding working capital, to $17.1
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