Energy giant Shell is poised to reveal a substantial decline in its annual earnings, with analysts forecasting a significant downturn following last year's dramatic slump in global oil prices. The company's full-year results, scheduled for release on Thursday, are expected to lay bare the financial impact of the challenging market conditions that dominated 2025.
Analysts Forecast Sharp Earnings Decline
According to consensus estimates from financial analysts, Shell is set to report a 21% drop in full-year underlying earnings to 18.79 billion US dollars (£13.66 billion). This represents a substantial decrease from the 23.72 billion dollars (£17.22 billion) recorded in 2024. The anticipated decline comes as oil prices experienced their most significant fall since 2020, during the height of the Covid-19 pandemic.
Oil Market Turbulence Drives Financial Pressure
The earnings slump follows a year of considerable volatility in global energy markets, with Brent crude prices dropping by 19% and marking a record-breaking third consecutive year of decline. This prolonged downturn was driven by an oversupply in the global economy, with production consistently outstripping demand throughout 2025.
Market conditions were further complicated by geopolitical conflicts, increased tariffs, and rising output from major oil-producing nations. These factors combined to push Brent crude below 60 dollars per barrel last month for the first time in nearly five years, creating substantial headwinds for energy companies worldwide.
Multiple Financial Metrics Show Decline
On Shell's preferred current cost of supplies (CCS) basis, annual earnings are predicted to drop by 14% to 56.71 billion dollars (£41.22 billion). The fourth quarter is expected to show particular weakness, with underlying earnings on a CCS basis forecast to fall to 12.88 billion dollars (£9.36 billion) from 14.28 billion dollars (£10.38 billion) during the same period a year earlier.
These anticipated results follow a recent trading update from Shell that revealed a weaker performance from its trading business in the latest quarter, directly attributed to the drop in crude prices. The company also signalled potential losses in its troubled chemicals and products division, highlighting the broad-based nature of the financial challenges.
Resilient Share Price Amid Market Pressures
Despite these significant financial headwinds and broader geopolitical pressures, Shell's share price has demonstrated notable resilience in recent months. This stability has been partly supported by recent gains in Brent crude prices, which have recovered above 70 dollars per barrel, providing some support for energy stocks across the sector.
Management Strategy Under Scrutiny
Financial experts at AJ Bell suggest that Shell's relative resilience may be attributed to Chief Executive Wael Sawan's ongoing strategic focus. His approach has emphasised maintaining tight control over costs, capital expenditure, and debt levels while simultaneously working to maximise the value of Shell's hydrocarbon assets.
"This may be partly down to boss Wael Sawan's ongoing focus on keeping costs, capex (capital expenditure) and debt down and his focus on maximising the value of Shell's hydrocarbon assets and balancing that with investment for future growth from renewables," noted AJ Bell analysts.
They added: "Shell's January update was mixed, thanks to a weaker showing in oil and gas trading and tough times for the chemicals business, although lower oil and gas prices bring some relief to the cost base of the refining operations."
Industry Challenges and Future Considerations
The chemicals sector faces particular challenges, with overcapacity in China creating significant pressure on global markets. "Overcapacity in China, which has a huge cost advantage when it comes to energy, remains a major problem for the chemicals and petrochemicals industries worldwide," the analysts observed.
Shareholders are expected to closely monitor Shell's capital expenditure plans, with comparisons to 2024's 19.6 billion dollars (£14.25 billion) in spending likely to feature prominently in discussions about the company's future direction and financial discipline.
Broader Strategic Questions Loom
Beyond the immediate financial results, Shell's leadership team is likely to face questions about several strategic issues. These include potential involvement in Venezuela as US political pressure mounts on major energy players to return to the country following recent geopolitical developments.
Additionally, the possibility of switching Shell's primary listing from London to New York remains a topic of investor interest. Michael Hewson of MCH Market Insights commented: "While not a currently live discussion, concerns remain that the move of the primary listing to NY remains under consideration, due to the consistent valuation gap between it and its US peers Exxon and Chevron."
\nThe forthcoming results will provide crucial insight into how one of Britain's largest companies is navigating a period of significant transition in global energy markets, balancing immediate financial pressures with long-term strategic considerations about its future direction and market positioning.
