Shell Flags $10-15 Billion Working Capital Outflow Amid Commodity Price Volatility

In a notable development, energy giant Shell has signalled a significant hit to its short-term liquidity, flagging a working capital outflow of between $10 billion and $15 billion for the first quarter of 2026. In an update released on Wednesday, the company detailed how unprecedented commodity price volatility, triggered by the escalating US-Israeli conflict with Iran, has reshaped the earnings landscape for oil majors. Despite the liquidity crunch, Shell expects to offset the impact through a surge in oil trading profits, offering a glimpse into how global energy markets are navigating a period of intense geopolitical risk. According to a Reuters report, the fallout caused by the war on the oil major has extended beyond price action to physical infrastructure. Attacks on Gulf neighbors have notably impacted Shell’s Qatari Pearl gas production plant, where the company anticipates that essential repairs could take approximately one year to complete. Shell has subsequently cut its first-quarter outlook for integrated gas production, citing the disruptions in Qatar as a primary driver. The combination of physical supply constraints and regional instability is expected to lead to weaker gas output for the quarter. However, analysts interviewed by Reuters suggest that the company’s diversified portfolio may provide a buffer. RBC analysts noted that while the scale of the working capital swing is “unusual,” Shell’s robust balance sheet is likely to absorb the shock. Notably as per analysts interviewed by Reuters, RBC has raised its net income estimate for Shell’s first quarter by 7% to $6.8 billion, anticipating a 31% jump in operating cash flow (excluding working capital) to $17.1 billion. While the gas segment faces logistical hurdles, Shell’s trading division is emerging as a major beneficiary of the current market structure. The company confirmed that stronger oil trading results are expected to partly offset the hit to short-term liquidity. As per reports, the company remains optimistic that these working capital movements will reverse over time as oil and gas prices eventually ease. Following the latest update released by Shell, UBS analysts have also updated their projections, raising first-quarter net income estimates by 18% to $6.9 billion, further underscoring the market’s belief that trading gains will likely outweigh the operational setbacks in Qatar