Shell warns of hit from rocketing gas prices

·2 min read
SAN RAFAEL, CALIFORNIA - OCTOBER 05: Gas prices approaching $5 a gallon are displayed in front of a Shell gas station on October 05, 2021 in San Rafael, California. Gas prices in the U.S. are continuing to rise to the highest level since 2014. According to AAA, the national average for a gallon of regular unleaded gasoline inched up to $3.20 over the last month, over $1 per gallon more than one year ago.   Justin Sullivan/Getty Images/AFP / AFP / GETTY IMAGES NORTH AMERICA / JUSTIN SULLIVAN
Shell warned its quarterly results would take a knock due to the gas price crisis. Photo: Justin Sullivan/Getty Images/AFP

Royal Dutch Shell (RDSB.L) warned on Thursday that wild market swings with soaring natural gas and electricity prices will impact its revenue for the third quarter. 

Ahead of its quarterly results this month, the major reacted to a parabolic rise in natural gas prices — with contracts for delivery in November shooting almost 40% higher to above £4 per therm on Wednesday. 

Prices were near £2 a therm a little over a week ago, a fact that sparked alarm in the market. 

Shell's shares headed 1.3% higher in early trade in London.

Gas prices have been pushed up amid strong demand in economies recovering from the COVID-19 pandemic. 

Ofgem and the UK government have met frequently over the last few weeks in order to come up with a solution that will prevent consumers wallets being hit by the rises, and smaller providers going to the wall. 

Enstroga, Igloo Energy and Symbio Energy went bust at the end of September. At the time, nine small UK energy suppliers had now gone bust since the start of September alone. The others included People’s Energy, Green Supplier Ltd, Utility Point, PfP Energy, MoneyPlus Energy, and Avro Energy.

Shell is the top seller of liquified natural gas (LNG) and accounts for about a fifth of the global demand.

Cashflow in LNG "is expected to be significantly impacted by large variation margin inflows on the back of the prevailing gas and electricity price environment," the company said.  

Read more: UK petrol prices to hit all time high by Christmas, warns RAC

The oil major also said that hurricane Ida in the US and Gulf of Mexico had also hit its books to the tune of $400m (£294m) for the quarter.

There was an outage of around 90,000 barrels of oil equivalent per day at some of its offshore oil fields due to the hurricane.

Watch: Army put on standby as UK gas shortage causes panic

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