London, Jan 27, 2026, 08:17 GMT — Regular session.
- Shell shares barely moved early Tuesday following a broker downgrade and new legal challenges in Kazakhstan
- RBC downgraded Shell to “sector perform” and dropped its price target to 3,200p from 3,600p
- Reuters reported that partners in the Karachaganak project may face an arbitration payout ranging from $2 billion to $4 billion; Shell also revealed new share buybacks
Shell shares slipped in early London trading Tuesday, as investors digested the prospect of a multi-billion-dollar arbitration bill in Kazakhstan alongside a new broker downgrade.
The headlines arrive just over a week ahead of Shell’s quarterly earnings, as shareholders eye whether the company can maintain hefty cash returns amid volatile oil prices and ongoing challenges in chemicals.
Shell’s reliance on share buybacks to boost per-share figures means any drop in cash flow is a red flag. The stock’s premium over certain European rivals is already raising eyebrows.
Shell slipped roughly 0.1% to 2,671 pence by 0816 GMT, following Monday’s close at 2,672.5. Early trades ranged from 2,669.7 up to 2,684.0. (Google Finance)
RBC Capital Markets downgraded Shell from “outperform” to “sector perform” and slashed its price target to 3,200 pence from 3,600 pence. The firm pointed to challenges across multiple areas, including the chemicals restructuring. Biraj Borkhataria, RBC’s energy analyst, noted that Shell had been a “preferred name” in European energy due to buybacks but now expects investors to prioritize “portfolio longevity over near-term shareholder returns.” (Investing, ProactiveInvestors)
On Monday, Reuters reported that Bloomberg News revealed an international consortium behind Kazakhstan’s Karachaganak field lost an arbitration case filed by the government. The partners could face liabilities up to $4 billion. The court hasn’t finalized the amount yet, and the consortium may still appeal, Reuters added. (Reuters)
Shell and Italy’s Eni each own a 29.25% stake in the project, Reuters reported. Chevron, Lukoil, and Kazakhstan’s KazMunayGas are also participants. Neither Shell nor Eni responded immediately to requests for comment.
Shell revealed another tranche of repurchases under its ongoing buyback programme. The company purchased 654,933 shares in London at an average price of 26.8935 pounds per share (by volume), alongside 658,968 shares in Amsterdam at 31.1419 euros each. Both sets are slated for cancellation. A buyback reduces the total number of shares outstanding. (Investegate)
The broader sector kicked off with crude prices slipping. By 0740 GMT, Brent had dropped around 0.6% to $65.18 a barrel as traders awaited a potential restart of Kazakhstan’s supply. Meanwhile, a U.S. winter storm limited some output, Reuters reported. “Supply risks haven’t totally evaporated,” noted Daniel Hynes, an analyst at ANZ, highlighting ongoing tensions in the Middle East. (Reuters)
The Kazakhstan bill remains uncertain. Should the partners succeed on appeal or if the final award is lower, the market could largely ignore it. However, if it edges toward the higher range, investors might begin to factor in tighter limits on buybacks and dividends.
RBC outlined a broad spectrum of possibilities, including a downside case hitting 1,500 pence. Such a gap could persist if chemicals stay sluggish or if trading, known for sharp quarterly swings, remains subdued.
Shell will release its fourth-quarter results and interim dividend details on Feb. 5 at 0700 GMT. Investors are likely to zero in on the speed of the buyback program and updates on the chemicals business reset. (Shell)
Until then, traders will watch oil closely, especially with OPEC+ set to meet on Feb. 1. They’ll also be tracking any fresh updates on the Karachaganak arbitration.
