Shell profits climb to $43B despite oil price decline

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Shell has reported year-to-date profits surpassing US$43 billion, marking one of its strongest operational years despite softening global oil prices. The company’s third-quarter earnings reached US$5.4 billion, up 27 percent from the previous quarter, even as the price of oil continued to slide compared to 2024 levels.

This financial resilience stems not from favorable market conditions but from the company’s strategic expansion into high-yield, low-cost production zones, particularly in deepwater offshore locations. Although profits are down slightly from the US$6 billion Shell earned in third quarter 2024, the consistent increase in production volume has allowed the company to offset pressure from declining prices.

This year’s performance demonstrates how disciplined capital allocation and upstream efficiency can deliver strong returns even under commodity price headwinds. It reflects Shell’s shift toward a business model built to withstand volatility, with a focus on return per barrel instead of total volume.

Brazil and Gulf of Mexico fuel upstream gains

Shell’s profit engine in 2025 is powered largely by operational breakthroughs in two prolific deepwater regions: Brazil and the US Gulf of Mexico.

In Brazil, Shell has scaled production significantly in the Santos Basin, most notably through its stake in the Mero field. The launch of the Mero-4 floating production unit, with a nameplate capacity of 180,000 barrels per day, has added substantial volume to Shell’s portfolio. The field’s total output capacity now exceeds 770,000 barrels per day, making it one of the most productive deepwater sites in the world.

Meanwhile, in the Gulf of Mexico, the Whale platform, one of Shell’s largest deepwater projects in the region, has begun operations. Designed to process up to 100,000 barrels of oil equivalent per day, Whale represents a strategic addition to Shell’s North American upstream business, delivering production at breakeven prices below US$35 per barrel.

These regions offer both scalability and alignment with Shell’s strategy to concentrate capital in long-life, low-cost, high-margin assets. The Brazil and Gulf of Mexico operations are central to Shell’s effort to remain resilient in the face of commodity market fluctuations.

Falling oil prices challenge margin strength

Global oil prices have softened throughout 2025. The average price per barrel for third quarter fell to around US$69, down from more than US$80 in the same period last year. Natural gas prices also declined, driven by milder weather in Europe and slower demand growth in Asia.

This trend has introduced margin pressure across the sector. For Shell, although volume-driven growth helped shield against sharper impacts, the company still reported a year-over-year decline in earnings.

Lower prices have prompted increased investor focus on capital discipline and return on investment. Shell has responded with greater operational efficiency, prioritizing output from lower-cost regions while cutting exposure to higher-cost, marginal projects.

The company’s performance illustrates how integrated energy firms can navigate a weak pricing environment while maintaining profitability.

Shell’s buyback strategy signals investor confidence

One of the clearest indicators of Shell’s financial strategy in 2025 is its continued commitment to share buybacks. The company has announced a new US$3.5 billion repurchase for the fourth quarter, marking the 16th consecutive quarter with buybacks at or above US$3 billion.

This steady approach reflects Shell’s plan to return value directly to shareholders even in a less favorable market. Rather than raise dividends or build large cash reserves, Shell is distributing capital through repurchases, signaling both balance sheet strength and confidence in future cash flows.

Analysts see this as a move to boost per-share earnings and retain investor trust as the industry faces energy transition pressures and policy uncertainty.

Shell’s financial results also highlight the political dimensions of oil and gas profitability, particularly in the United Kingdom. The company disclosed it paid about US$509 million in windfall taxes under the UK’s energy profits levy during the first nine months of the year.

This tax, introduced following surging energy prices in 2022, remains controversial. Shell and other producers have warned that prolonged or expanded levies could discourage new investment in the North Sea and other UK-based energy infrastructure.

The broader question is whether these taxes, initially presented as temporary, will become permanent features of the fiscal landscape. If so, companies like Shell may shift more capital toward markets with more predictable policy environments, including Brazil, the US, or parts of Africa.

Sources:
The Guardian