Shell Plc said its indicative refining margins for the first quarter of 2026 climbed to $17 per barrel, and cautioned that extreme swings in commodity prices are expected to create a major working capital outflow.
The company placed its anticipated working capital movements for the quarter in a range of negative $15 billion to negative $10 billion, attributing the expected drain to price volatility and the knock-on effects on inventory valuations and receivables.
Within Chemicals and Products, Shell reported indicative refining margins of $17 per barrel, up from $14 per barrel in the fourth quarter of 2025. Indicative chemicals margins were essentially stable at $139 per tonne, marginally below the prior quarter's $140 per tonne.
Shell provided guidance across several operating segments. Integrated Gas production is projected at 880,000 to 920,000 barrels of oil equivalent per day, down from 948,000 boe/d in the prior quarter. The company pointed to "the impact of the Middle East conflict on Qatari volumes" in explaining the reduction. LNG liquefaction volumes were forecast at 7.6 million to 8.0 million tonnes, versus 7.8 million tonnes in the fourth quarter.
Upstream production was indicated at 1.76 million to 1.86 million boe/d, compared with 1.892 million boe/d in the previous quarter. The company noted this range includes a reduction in output associated with the incorporation of the Adura joint venture.
Marketing sales volumes are expected to be between 2.55 million and 2.65 million barrels per day, slightly below the fourth-quarter level of 2.701 million b/d. Nevertheless, Shell said adjusted earnings in Marketing are "expected to be significantly higher than Q1'25."
Operational utilisation metrics showed some improvement. Chemicals utilisation was projected at 81% to 85%, up from 76% in the prior quarter. Refinery utilisation was guided to 95% to 99%, compared with 95% previously.
In Renewables and Energy Solutions, Shell forecast adjusted earnings of $0.2 billion to $0.7 billion, compared with $0.1 billion in the fourth quarter. The company also expects Trading & Optimisation to be "significantly higher than Q4'25."
At the corporate level, adjusted earnings were forecast in a band of negative $1.0 billion to negative $0.8 billion, versus negative $0.6 billion in the prior quarter.
Shell quantified several other balance sheet and cash-flow related items. Group tax paid was expected at $2.0 billion to $2.8 billion, relative to $2.6 billion paid in the fourth quarter. Financial derivative instrument movements were forecast to lie between negative $1 billion and positive $4 billion.
The company said non-cash net debt will be affected by a $3 billion to $4 billion increase in variable components of long-term shipping leases.
Finally, Shell reiterated that its outlook is "subject to increased uncertainty" given the ongoing situation in the Middle East.
Context and implications
The guidance released by Shell combines a modest lift in refining margins with an explicit warning about how volatile commodity markets can translate into very large short-term cash movements. The range provided for working capital reflects the sensitivity of inventory and receivable valuations to rapid price changes. Operationally, while utilisation rates for chemicals and refineries are set to rise, production guidance in Integrated Gas and Upstream shows reductions versus the prior quarter, in part related to regional conflict impacts and corporate restructuring.