International oil major Shell has posted its second-highest quarterly earnings on record as the energy market surge caused by the Middle East crisis helped to double its net profit to almost US$10 billion in the three months to June.

Europe’s biggest oil and gas company reported a quarterly profit of US$9.8 billion (£7.4 billion), more than double the figure for the second quarter last year and the highest since its record-high earnings in the months after Russia’s invasion of Ukraine.

The company behind plans to develop the Jackdaw gasfield in the North Sea revealed its earnings before a planned meeting between Britain’s new prime minister, Andy Burnham, and Shell’s chief executive, Wael Sawan, who is expected to urge the government to develop North Sea projects.

Call for imposition of increased taxes on Shell

Shell’s surging profits reignited calls from environmental campaigners for taxes to fund support for the households hardest hit by the rise in energy costs. Rudy Schulkind, a political campaigner at Greenpeace, said the environmental group is “running out of words to describe the obscenity” of huge profits at Shell.

According to Schulkind, “Europe is engulfed by apocalyptic wildfires, communities across Asia are reeling from devastating floods, and the UK battles through drought and yet more dangerous heat. These aren’t anomalies, they’re the defining story of the fossil fuel age. Shell takes the profits, and the rest of us pick up the catastrophic bill.” 

He called on the government to implement a windfall tax on big oil companies and to use the revenue “to help households with the cost of living, strengthen our resilience against extreme weather, and supercharge the transition to clean, affordable energy”. Shares in Shell rose 1.5% in early trading on today to £33.72, the highest since early June.

Shell gas production down

The severe disruption in global energy markets since the US-Israeli attacks on Iran in late February led to a 30% drop in Shell’s gas production in the last quarter compared with the same period a year ago, after its gas-to-liquids plant in Qatar was damaged by Iranian drones.

The company was more than able to offset the lost earnings, however, as a result of higher global market prices and savvy trading. In its liquefied natural gas business, earnings grew to $2.7 billion in the second quarter, up 55% from last year.

Its chemicals and products business, which is home to its oil trading desk, reported earnings of $2.3 billion, up sharply from $118 million a year ago and the division’s highest quarterly profit since 2021.

Over supply warning

The global oil price has climbed from about US$61 a barrel in January to highs of US $126 at the end of April, after Iran’s de facto blockade on flows of oil and gas through the strait of Hormuz. The market volatility has included some of the sharpest price swings on record, which traders are able to use to amplify their profits. 

Brent crude, the international benchmark, was trading at just over $90 a barrel today. Shell’s oil rival BP has reportedly warned staff that a potential oversupply of oil and gas could lead to lower market prices to come, as it set out plans to cut another 700 jobs from its global operations following cuts of 7,000 last year.