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Shell could start profit slowdown as Labour pushes to expand windfall tax

CITYA.M.

Shell could start profit slowdown as Labour pushes to expand windfall tax

: MONDAY 24 OCTOBER 2022 4:13 PM

The historic profit run from oil and gas titans is expected to slow down this week, when Shell unveils its latest results.

Producers are grappling with both inflation and suppressed demand amid growing expectations of a global recession.

Shell has warned ahead of its third quarter update this week that earnings will likely be dented by a sharp hike in refining costs and weaker natural gas trading.

In an update earlier this month, it revealed indicative refining margins dropped to $15 a barrel compared with $28 a barrel in the previous three months of trading.

The energy giant will update investors on its performance this Thursday, the first in a wave of results from oil and gas giants over the coming days.

Rivals BP, Chevron, Exxon Mobil, Equinor and Saudi Aramco will also announce their results over the coming days – offering markets a flurry of data on the latest conditions in the fossil fuel sector.

The London-based energy giant announced record profits of over $20bn in the first six months of trading this year, including a record $11.5bn in its second quarter.

This was powered by soaring oil and gas prices however, since then, fears of an economic downturn and a slide in oil prices has hampered profits.

Prices across commodity markets are starting to ease with Europe topping up supplies ahead of winter, lowering fears of supply shortages and a potential energy crunch.

However, Shell is still expected to reported strong profits for the quarter, and is also expected to conclude a $6bn buyback for its shareholders this week.

This raises the prospect of more pressure from the Labour party for the windfall tax to be extended over the coming months.

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