Oil and gas behemoth Shell has revealed a significant 22% decline in its full-year underlying earnings, a stark reflection of the turbulent global energy markets and a sustained slump in crude oil prices throughout 2025.
Financial Performance Under Pressure
The FTSE 100-listed energy giant reported that its underlying earnings, which exclude certain commodity-price adjustments and one-off charges, fell to 18.53 billion US dollars, equivalent to approximately £13.6 billion. This substantial profit hit was notably worse than many market analysts had anticipated, underscoring the severity of the challenges faced by the sector.
Quarterly Performance Highlights Deepening Challenges
The final quarter of 2025 proved particularly difficult, with Shell's earnings plummeting by a dramatic 40% compared to the previous three-month period. This sharp quarterly decline contributed heavily to the overall annual downturn, painting a picture of accelerating financial pressure as the year drew to a close.
Shareholder Returns Defy Profit Slump
In a move that demonstrates confidence in its long-term financial resilience, Shell announced a further 3.5 billion dollars, or about £2.7 billion, in share buybacks scheduled for completion during the first quarter of the current year. This commitment to shareholder returns comes alongside a confirmed 4% increase in the company's dividend payout.
Shell's Chief Executive, Wael Sawan, commented on the results, stating, "2025 was a year of accelerated momentum, with strong operational and financial performance across Shell." He further elaborated, "In the fourth quarter, despite lower earnings in a softer macro environment, cash delivery remained solid. Today we announce a 4% increase in our dividend and 3.5 billion dollars in share buybacks, marking the 17th consecutive quarter of at least three billion dollars of buybacks."
The Crude Oil Price Context
The dramatic profit decline follows a year in which the global benchmark price for crude oil fell by 19%. Remarkably, this represents the third consecutive year of declining oil prices, a record-breaking trend driven by a persistent global supply glut that has outpaced demand.
The price falls occurred against a backdrop of geopolitical conflict, rising international tariffs, and increased production from major oil-exporting nations. Brent crude, a key global benchmark, dipped below 60 dollars per barrel last month, a price point not seen in almost five years, highlighting the sustained pressure on the energy market.
Market Implications and Future Outlook
Shell's financial results serve as a critical barometer for the wider energy industry, signalling the profound impact of lower commodity prices on even the largest corporate players. The company's decision to maintain robust shareholder returns despite the profit slump will be closely watched by investors and analysts for signals about management's confidence in future cash flows and market recovery prospects.
