Shares in oil giant Shell (SHEL) leaked over 3% today after it lowered oil production forecasts for the second quarter.
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Lowered Hopes
In an update today Shell cut the top end of its production guidance for the integrated natural gas division to 900,000 to 940,000 barrels of oil per day, from between 890,000 to 950,000. It reported 927,000 in the first quarter.
Shell also said trading results for its integrated gas division would be “significantly lower” than in the first three months of 2025. That’s a blow to the company and investors as the trading division has been a big driver of strong profits in recent years.
The upper end of its outlook for its liquefied natural gas (LNG) production was also lowered, to 6.4 to 6.8 million metric tons in the second quarter compared with a previous range of 6.3 to 6.9 million tons.
Shell added that upstream oil production is expected to fall quarter-on-quarter in the three months to June after output was impacted by scheduled maintenance and the completed sale of the Shell Petroleum Development Company in Nigeria.
It is forecasting upstream production of around 1.66 million and 1.76 million equivalent barrels a day, down from 1.86 million barrels in the first quarter.
Volatile Prices
Shell is trading in a volatile environment with oil prices ebbing and flowing in recent months as a result of President Trump’s tariffs and the recent conflict in the Middle East between Israel and Iran.
Oil prices have also come under pressure from plans by the OPEC+ group of oil producing countries to ramp up output by 548,000 barrels per day from next month.
This increase in supply allied to a weakening in global demand, now that Trump’s tariffs are firmly back on the agenda, means prices could drop even lower.
Shell has denied it has any desire to buy struggling rival BP (BP) in a historic $100 billion deal, but this latest update means the rumors are unlikely to go away.
Is SHEL a Good Stock to Buy Now?
On TipRanks, SHEL has a Strong Buy consensus based on 7 Buy and 2 Hold ratings. Its highest price target is $88. SHEL stock’s consensus price target is $78.90 implying a 9.71% upside.
