The world’s largest oil traders are navigating a perfect storm. Shell’s Pernis refinery near Rotterdam—Europe’s biggest—has been switched to emergency “Max-Jet Mode,” prioritizing kerosene production above all other petroleum products. The drastic measure comes as the Strait of Hormuz remains blocked, severing Europe’s supply lines from the Gulf region and triggering a scramble for alternative crude sources.
“We’re seeing a complete reorientation of the market,” said Frans Everts, who leads Shell’s Dutch operations. The company is now scouring global markets for replacement crude grades to compensate for lost Middle Eastern volumes. The knock-on effects are already visible across the aviation sector. KLM has slashed flights at Amsterdam’s Schiphol airport, which draws its fuel directly from Pernis. Lufthansa has cut roughly 20,000 flights from its upcoming summer schedule as airlines hoard dwindling reserves.
Yet even as Shell grapples with this operational crisis, the company is simultaneously closing out a $3.5 billion share buyback program. Morgan Stanley has been acquiring the final tranches on European exchanges, marking the seventeenth consecutive quarter in which the energy giant has repurchased at least $3 billion of its own stock. All acquired shares will be cancelled.
The timing is fraught. Shell’s management has flagged significant headwinds for the first quarter, with working capital expected to drain between $10 billion and $15 billion due to volatile commodity prices tying up cash in inventories and receivables. Oil and gas production is likely to dip slightly below the previous quarter’s levels. The complex operation at Pernis, combined with the need to source more expensive alternative crude, is expected to squeeze refinery margins in the coming months.
Should investors sell immediately? Or is it worth buying Shell?
On the positive side, the marketing division should comfortably beat last year’s figures, energy trading is holding at the strong levels seen in the prior quarter, and both the chemicals and renewables units are showing meaningful gains. The stock has responded accordingly, trading at €38.20—up nearly 19 percent since January and roughly a third higher year-on-year. Analysts see Brent crude potentially hitting $130 a barrel if the conflict persists, though a ceasefire could send prices tumbling toward $70.
Shell’s structural cost-cutting has already delivered results, with overheads falling by more than $5 billion—hitting the lower end of its long-term savings target ahead of schedule. Capital expenditure for the current year is pegged at roughly $21 billion.
Investors have two key dates on their calendars. On April 29, Shell will release its first-quarter results, revealing the full financial impact of the crisis. On May 7, the company will present final quarterly figures, including a proposed 4 percent dividend increase. Then on May 19, shareholders gather in London for the annual general meeting, where a contentious climate resolution looms. An activist investor group is demanding more detailed strategy disclosures for scenarios involving declining oil and gas demand. Shell’s board has rejected the proposal, arguing existing disclosure requirements are sufficient.
The tension between short-term crisis management and long-term capital discipline has rarely been more acute. Shell must simultaneously keep Europe’s planes flying, manage the costs of emergency supply chains, and maintain the buyback momentum that has become a cornerstone of its investor appeal. The next few weeks will show whether the company can balance all three.
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