LONDON, Jan 11, 2026, 17:44 GMT
Shell on Thursday flagged that weak oil trading would drag its chemicals and products division into a fourth-quarter loss, casting doubt on its $3.5 billion quarterly share buyback. RBC’s Biraj Borkhataria pinpointed the main issue: will management “hold the line” on buybacks? HSBC’s Kim Fustier expressed less confidence in that. UBS’s Josh Stone slashed his Q4 net income forecast by 14% to $3.6 billion, while Citi’s Alastair Syme trimmed his estimate 11% to $3.83 billion. Shell shares dropped 2.6%. 1
The warning is crucial now since trading, refining, and chemicals have been the key drivers behind large quarterly cash returns. Investors crave the payout but also demand evidence that transition spending won’t morph into a slow drain.
A Sunday report from ad-hoc-news.de highlighted Shell’s shift from a traditional oil firm to an integrated energy and chemicals player. The company is dialing up its focus on gas, power, hydrogen, biofuels, and CO2 management. It’s funneling cash from oil and gas into scaling LNG (liquefied natural gas), EV charging, renewables, and carbon capture and storage (CCS), all while keeping a sharp eye on returns. 2
Another analysis on the site framed Shell as a platform moving “molecules” and “electrons” through the value chain, contrasting it with BP and TotalEnergies, who have chosen different paths toward low-carbon energy. It noted that Shell has focused more on LNG scale and trading instead of aggressively expanding renewables volume, whereas TotalEnergies has made a bigger push into utility-scale solar and batteries.
Shell’s fourth-quarter 2025 update projects upstream output between 1.84 million and 1.94 million barrels of oil equivalent per day (boe/d), with integrated gas production estimated at 930,000 to 970,000 boe/d. LNG liquefaction volumes are expected to range from 7.5 million to 7.9 million tonnes. The company raised its indicative refining margin to $14 a barrel from $12 but lowered its chemicals margin estimate to $140 a tonne from $160. Chemicals adjusted earnings will show a “significant loss,” Shell said, citing a non-cash deferred tax adjustment that affects reported profit but not cash flow. Cash flow excluding working-capital swings includes about a $1.5 billion outflow related to the timing of emissions-certificate payments under Germany’s BEHG (Fuel Emissions Trading Act). Additionally, working-capital changes factor in a usual $1.2 billion payment of German mineral oil taxes. Shell will release full results on Feb. 5, with analyst consensus due Jan. 28. 3
Jefferies boosted its price target on Italian oil giant Eni to 19.50 euros from 18, maintaining a Buy rating, analyst Mark Wilson said in a report that also trimmed base oil-price forecasts for 2026 and 2027. This move reflects how brokers are revising European energy valuations amid weaker crude price assumptions and mixed earnings in downstream and chemicals. 4
Shell’s mix is a double-edged sword. If trading remains sluggish and chemicals margins don’t bounce back, the cash available for buybacks will tighten. Meanwhile, the new-energy segments — charging, hydrogen, carbon services — still need to prove they can expand without hurting returns.
Shell is sticking to discipline for the moment: maintain the oil and gas core, lean heavily on LNG and trading, and chip away at new energy projects that promise profits. Investors will be closely watching if this strategy holds up when the quarter wraps and buyback decisions are revisited.
