Oil has been on a knife edge in 2026, with attacks on Iran’s Kharg Island briefly pushing Brent crude (QAM26) above $110 and a very tenuous ceasefire raising fresh concerns about trafficking through the Strait of Hormuz. That same flashpoint has fueled rumors that a severe reduction in shipments could even push prices toward $200 a barrel, turning each headline into a new risk check for global energy companies.
Shell (SHEL) is right in the middle of that story. The company says strong oil trading should give its first-quarter numbers a boost, even as it reduces its gas production outlook due to the situation with Iran. That combination of higher crude oil prices, weaker production guidance and capital outflow from the region is a strange backdrop for a stock that’s already up more than 20% this year and still yields about 3.1%.
The real question now is whether this ceasefire and the risk of a Middle East cooling make SHEL more attractive or more vulnerable at these levels. Let’s dive in.
Shell is a UK-based energy giant that produces and sells oil, natural gas and liquefied natural gas (LNG) in global markets.
Its New York-listed shares are trading at $91.18 on the afternoon of April 9, up 24% so far in 2026 and 42% over the past year.
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SHEL shares still appear reasonably priced, trading at 14.96 times trailing earnings and 6.04 times price-to-cash flow ratio, versus the sector medians of 16.79 times and 7.39 times. It has a market value of around $266.6 billion and offers an annual forward dividend of $2.98 per share, which is equivalent to a yield of 3.2%.
Its fourth-quarter 2025 results, released in late January, showed adjusted earnings of $3,256 million, up from $3,661 million a year earlier and about 40% below the previous quarter. That worked out to $1.14 per share, less than the $1.21 Wall Street was looking for and the weakest quarterly profit since early 2021.
Shell’s cash flow tells a stronger story. Its operating cash flow for 2025 amounted to $42.86 billion, a year-on-year increase of 28.24%. However, its net cash flow fell to -$8.89 billion after a 46.84% drop driven by heavy investments and money returned to shareholders.
Still, the board kept its foot on the buyback accelerator and approved another $3.5 billion buyback program for the first quarter of 2026.
Shell is quietly crafting a long-term growth plan rather than just taking short-term oil measures. It recently signed an agreement with the Greek group Metlen (MTLPF) to supply and market between 500 and 1 billion cubic meters of LNG per year between 2027 and 2031. Those volumes will move through the Revithoussa and Alexandroupolis terminals in Greece and towards the Vertical Gas Corridor. The aim is to strengthen gas supplies to southern and central Europe as the region continues to move away from Russian volumes.
A major effort is also underway offshore Nigeria. The company plans to invest an additional $20 billion in the proposed Bonga South West deepwater project, on top of the approximately $7 billion already spent in the country from 2023. This follows a final investment decision on Bonga North.
The field contains more than 300 million barrels of recoverable resources and targets peak production of approximately 110,000 barrels per day before the end of the decade. These projects are supported by the Nigerian government and offer a long portfolio of barrels with higher margins. They can help cushion any impact from lower gas production related to Middle East problems.
Venezuela adds another possible leg of growth. The thaw driven by the United States has reopened the door to new oil investments. In a White House meeting with President Donald Trump, CEO Wael Sawan said the company is “ready to go” and already sees “opportunities worth a few billion dollars” once licenses are approved.
Analysts don’t rule out Shell’s rally as a quick headline-grabbing move on Iran. The first-quarter report will be released on May 1, and the Street expects earnings of $1.86 per share, just ahead of the $1.84 reported in the same period last year. This points to a small but positive year-on-year growth rate of around 1.09%.
This stable outlook supports a “Moderate Buy” consensus view on SHEL stock from 26 analysts, indicating cautious support rather than hype. The average price target stands at $93.19, implying just 2% upside from here. That small gap suggests many on the street think Shell has largely “realized” its 2026 profits.
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SHEL looks like a sensible option for investors who already own it and a buy-on-weakness idea for anyone looking to add energy exposure. The combination of a roughly 3.2% yield, ongoing buybacks, and stable earnings expectations points to a slight tilt toward more upside than downside over the next year. Shell’s next move will likely depend on how its first-quarter report compares and whether strong oil trading can continue to offset lower gas production as the Iran ceasefire takes hold.
As of the date of publication, Ebube Jones had no (directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article are for informational purposes only. This article was originally published on Barchart.com
