Shell's Q4 Production Set to Rise While Trading Results Expected to Fall Short

Shell plc (SHEL), the major energy corporation, is presenting a paradoxical outlook for the final quarter of 2025—higher upstream production paired with significantly weaker oil trading outcomes. This divergence reflects the company’s operational strengths clashing against market headwinds, as crude volatility and seasonal pressures reshape financial performance.

Production Gains Support Higher Output Levels

Shell’s fourth-quarter upstream operations are forecast to reach between 1.84 million and 1.94 million barrels of oil equivalent per day (boe/d), marking a gradual increase from the 1.83 million boe/d achieved in Q3 2025. This higher production target benefits from the Adura joint venture integration and represents the company’s ability to sustain output momentum despite global market turbulence.

The anticipated higher production stems from multiple drivers: new facilities beginning operations, enhanced extraction efficiency from mature fields, and advanced technological deployment. However, this production growth occurs within a context of persistent pricing uncertainties and demand fluctuations that continue to compress margins across the sector.

Oil Trading Results Facing Sharp Downward Pressure

Contrasting sharply with production prospects, Shell warned that oil trading performance would be significantly lower in Q4, driven primarily by steep declines in crude benchmarks. Market volatility has intensified, with geopolitical flashpoints and demand shifts creating pricing pressure that directly impacts trading divisions’ profitability.

Historically a substantial earnings contributor, Shell’s trading segment faces compression as margin opportunities narrow. This downturn illustrates how commodity price movements can swiftly undermine financial results, even when operational production efficiency improves.

Marketing Segment Under Seasonal and Tax Strain

The marketing division confronts dual headwinds: seasonal demand weakness typical of Northern Hemisphere winter months, coupled with non-cash deferred tax adjustments. Colder weather traditionally reduces consumption of refined fuels and heating products, while tax optimization complexities continue to pressure adjusted earnings across this segment.

Chemicals Division Confronting Below-Break-Even Performance

Shell’s chemicals sub-segment is expected to post considerable adjusted earnings losses during Q4. The division, producing plastics, detergents and specialty formulations, faces elevated feedstock costs, weak industrial demand and intensifying competitive pressures. These factors compound broader macroeconomic headwinds dampening demand across manufacturing sectors.

Canadian Oil Sands Portfolio Adjustment Impact

The completion of Shell’s Canadian oil sands asset swap resulted in lower production levels for Q4, with oil sands output declining to approximately 20,000 boe/d. While numerically modest within the broader portfolio, this transaction reflects Shell’s strategic shift toward lower-carbon energy solutions and cleaner technology investments, moving away from higher-carbon extraction methods.

Summary: Navigating Mixed Signals in Energy Markets

Shell’s Q4 2025 guidance encapsulates the energy sector’s current complexity: higher production output contrasts with trading headwinds and divisional pressures. While upstream gains underscore operational capability, margin compression from falling prices and seasonal dynamics demonstrates the sector’s inherent volatility. Shell’s portfolio optimization and strategic investments position it to adapt as energy markets continue evolving.