Shell has just cashed in a major victory in the second quarter. The one thing that can be blamed for more than doubling the energy giant’s profits is oil and gas prices.

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Shell Beats Every Forecast

Shell’s adjusted profits for the quarter was $9.84 billion. That was an achievement that exceeded expectations. LSEG analyst estimates Total $8.79 billion. Even Shell’s internal estimate for itself of $8.92 billion missed the mark.

The growth story gets more impressive when you look back. Shell made just $4.26 billion a year ago. The profits have more than doubled since that time. Compared to the previous quarter’s $6.92 billion, the jump is just as striking.

Why Are Oil and Gas Prices Climbing?

The solution is the Middle East. The conflicts between the U.S. and Iran have rapidly intensified. The US has resumed airstrikes this week, the first strikes since it took a break in the region last week.

US officials called the strikes a direct response to an Iranian attack on American forces. With the war escalating, there is growing concern about oil supplies. That fear contributes to an increase in the price and energy firms such as Shell benefit.

Shell Shares Rise, But Rivals Are Winning Bigger

Investors have rewarded Shell too. Its shares are up some 21 percent on the London stock exchange this year. By any measure that’s a pretty significant jump.

Still, Shell is not leading the pack. All competitors BP, TotalEnergies, ExxonMobil and Chevron have delivered larger gains on the share price for the same rest period. Shell is benefiting from the oil price rally and is not reaping quite so much upside as some of its closest competitors.

What This Means for Investors

 

Shell’s results demonstrate that world wars can directly affect shares in a company. The tension is expected to remain in the Middle East, which could keep oil and gas prices volatile. That volatility may continue to drive higher profits for large energy companies even though it drives higher fuel costs for the rest of us.

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