What caused the significant drop in Shell's net profit in Q4 2023?

Shell's net profit decreased by 0.95 billion, or 9.5%, in Q4 2023, dropping to $10.47 billion. The primary reasons for this decline are:

1. Oil and Gas Prices: The decrease in oil and natural gas prices from their highs in 2022 impacted profit margins in the first half of 2023. Crude oil prices peaked above $120 per barrel in the same quarter of the previous year, but by Q4, they had fallen significantly. This downturn in prices directly affected Shell's revenue and profitability.
2. LNG Market and Trading Division: Shell's gas business experienced lower profits due to weak results from its gas market and trading division. This suggests that the company faced challenges in optimizing its gas trading activities, which contributed to the decline in net income.
3. Maintenance and Production Issues: The planned maintenance at the Prelude LNG platform offshore Australia and at its Trinidad and Tobago operations led to a 9% quarter-over-quarter decline in production volumes within the integrated gas division. This reduction in output undoubtedly impacted the company's earnings.

In summary, the significant drop in Shell's net profit in Q4 2023 was primarily caused by the decrease in oil and gas prices, challenges in its LNG market and trading division, and maintenance and production issues.

SHEL Net Income YoY, Net Income