Shell (NYSE:SHEL) updated its first-quarter 2026 outlook on April 8, raising its indicative refining margin to $17 per barrel while warning that the ongoing conflict in the Middle East is driving increased uncertainty across its global operations.
The London-based energy giant, which is scheduled to report full quarterly results on May 7, cited "unprecedented volatility in commodity prices" as a primary driver for significant shifts in its cash flow and debt profile.
The company expects a massive working capital outflow of between $10 billion and $15 billion for the quarter, a sharp reversal from the $1.3 billion inflow recorded in the previous period.
This swing largely reflects the impact of rapid price fluctuations on the value of inventory and receivables.
Despite the volatility, the company’s downstream business showed strength.
The indicative refining margin rose to $17 per barrel, up from $14 in the fourth quarter of 2025.
Refinery utilization remains high, projected at 95% to 99%, as the company continues to maximize output to capture these improved margins.
However, the geopolitical landscape has begun to weigh on production volumes.
Shell reported that its integrated gas production for the quarter is expected to range between 880,000 and 920,000 barrels of oil equivalent per day (boe/d), a decrease from the 948,000 boe/d achieved in the prior quarter.
The company explicitly attributed this decline to the impact of the Middle East conflict on Qatari volumes.
LNG liquefaction volumes are expected to remain stable at 7.6 to 8 million tonnes, as the ramp-up of LNG Canada helps offset weather-related constraints in Australia and maintenance outages in Qatar.
On the balance sheet, Shell warned that non-cash net debt is expected to increase by $3 billion to $4 billion.
This rise is tied to variable components of long-term shipping leases, which have fluctuated alongside the volatile macroeconomic environment.
In other segments, upstream production is forecast at 1.76 million to 1.86 million boe/d, down slightly from the 1.89 million boe/d recorded in the fourth quarter.
Marketing sales volumes are also expected to ease to a range of 2.55 million to 2.65 million barrels per day.
Financially, the company’s corporate adjusted loss is expected to widen to between $0.8 billion and $1.0 billion for the quarter.