Shell predicted a deterioration in oil trading results. What does this mean for the stock?

One of the world's largest oil companies Shell has warned of a deterioration in the results of its trading business in the fourth quarter of 2025. This will have a negative impact on the company's earnings: it expects at best a loss at the level of the third quarter. The decline in global oil prices has hit energy giants' profits, pointing to a challenging reporting season ahead.

Shell's trading business results for the fourth quarter of 2025 will be "significantly lower" than those for the third quarter, the company said Jan. 8. Although Shell's trading division oversees a variety of commodities, including oil and diesel, it is oil that accounts for a significant portion of its business, The Wall Street Journal explained.

Shell predicted that it will have an adjusted loss in the range from $0.4 bln to $0.6 bln. Thus, the company expects at best a repeat of the third quarter (also a loss of $0.4 bln). At the same time, the company adjusted its expectations for liquefied natural gas production from 7.4-8 million tons to 7.5-7.9 million tons.

In addition, Shell predicted a "significant loss" in its struggling chemicals division, but reported a slight increase in oil and gas production last quarter. Analysts, however, believe that higher taxes and operating costs will offset the effect of this, Bloomberg noted. The company plans to release its full quarterly earnings on February 5.

Shares of Shell in the moment fell by 3% at the trades in London on January 8. The value of the company's receipts on the pre-market in New York was falling by 2.5%.

The results of Shell's trading business deteriorated due to falling oil prices: Brent fell in price by 18% in 2025, and the U.S. operation to capture Venezuelan President Nicolas Maduro had a weak impact on quotations, Bloomberg believes. Although Shell does not separately disclose the results of this business line, market participants are watching it closely, as it can act as a key profit driver, the agency noted. For example, Shell's third-quarter results, which were better than expected, the company attributed, among other things, to successful trading, it added.

In addition, Shell's statement came at a time when the oil market is entering a period of oversupply that could lead to several months of difficult trading conditions, Bloomberg writes. The company's warning was a new signal that global oil giants are heading toward a more challenging reporting season, he believes. For example, the U.S. Exxon Mobil on Wednesday, January 7, also announced a more challenging fourth quarter.

It's a "tough end to the year" for Shell, said RBC Capital Markets analyst Biraj Borhataria in a note cited by Bloomberg. Borhataria had envisioned a "relatively weak quarter, but in fact the company's warning looks worse than expected," the agency reports."

UBS analysts expect that falling oil prices and higher costs will have a negative impact on the profits of European oil companies, although increased volumes and refining margins will support them somewhat, The Wall Street Journal writes. Although RBC analysts are not convinced of this: several oil giants had their refining capacities undergoing maintenance, which may have caused them to miss the opportunity, the newspaper added.

Analysts' opinions on Shell securities differ: they have a total of 17 recommendations to buy (16 ratings Buy and two Overweight), but at the same time almost as many advise to hold (15 Hold), MarketWatch shows. Another analyst thinks the securities are better off sold (Underweight). The average target price of $83.71 implies a 17% increase from the last closing level.

This article was AI-translated and verified by a human editor