Shell Signals Stronger Q2 Performance as Refining and Chemicals Margins Improve

London | EcoPulse24

Stronger Outlook Ahead of Q2 Results

Shell has released its second-quarter trading update, pointing to stronger operational performance ahead of its official earnings announcement on July 30, supported by higher refining margins, a sharp recovery in chemicals profitability and significantly stronger trading results.

The update comes as global energy markets continue to normalize following Middle East disruptions, increased OPEC+ supply and the gradual recovery of shipping flows through the Strait of Hormuz.

Refining Margins Climb

Shell expects its indicative refining margin to increase to around $20 per barrel, up from $17 per barrel in the first quarter, signaling improved downstream profitability despite softer crude prices.

The company also expects indicative chemicals margins to rise sharply to approximately $240 per tonne, compared with $139 per tonne in Q1, reflecting a substantial improvement in petrochemical market conditions.

Trading Business Expected to Outperform

Shell said its Trading & Optimisation business is expected to perform significantly better than in the first quarter, highlighting the continued importance of its global trading operations during periods of market volatility.

LNG Operations Recover

The company raised its outlook for Integrated Gas production to 610,000 – 650,000 barrels of oil equivalent per day, while LNG liquefaction volumes are now expected at 7.4 – 7.8 million tonnes during the quarter. Shell noted that first-quarter production had been affected by the Middle East conflict, particularly disruptions to Qatari volumes.

Cash Flow Expected to Improve

Shell also forecasts a significant recovery in working capital, expecting a positive contribution of $1 billion to $6 billion, following a $11.2 billion outflow in the first quarter caused by exceptional commodity price volatility.

EcoPulse24 Analysis

Shell's trading update offers more than a preview of quarterly earnings - it provides an early indication of how integrated energy companies are navigating today's rapidly changing market.

Although crude prices have weakened as OPEC+ increases supply and regional exports normalize, Shell expects stronger earnings support from refining, chemicals and its global trading operations. This suggests diversified energy majors remain well positioned even when upstream oil prices soften.

The recovery in LNG guidance also signals improving operating conditions following earlier regional disruptions, while stronger downstream margins indicate resilient demand across refined products and petrochemicals.

For investors, the update reinforces a broader trend across the energy sector: earnings are increasingly driven by diversified value chains rather than crude prices alone, making trading, refining and LNG critical contributors to profitability in volatile commodity markets.

Shell Q2 2026 Trading Update – Key Reference Data