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Market overview

Shell maintains a large business portfolio across an integrated value chain and is exposed to fluctuating prices of crude oil, natural gas, oil products, chemicals and power.

See "Risk factors".

This diversified portfolio provides resilience when prices are volatile. Our annual planning cycle and periodic portfolio reviews aim to ensure that our levels of capital investment and operating expenses are appropriate in the context of a volatile price environment.

We prepare annual strategic and financial plans that test different scenarios and their impact on prices, our businesses and organisation. We test the resilience of our projects and other opportunities against a range of prices for crude oil, natural gas, oil products, chemicals and power. Through this process, we identify potential interventions that we believe can drive value, preserve cash levels and maintain a strong balance sheet. This provides us with resilience against weak market prices.

The range of commodity prices and margins used in our project and portfolio evaluations is subject to a rigorous assessment of short-, medium- and long-term market drivers. These drivers include the extent and pace of the energy transition.

People working at desks on the trading floor in a Shell office (photo)
Photo: Shell staff working on the trading floor at Shell Centre, London.

Global economic growth

After a strong economic recovery from the lows of the COVID-19 pandemic, growth in 2023 was more moderate. Several forces are holding global economic growth back. These include the Russia-Ukraine war and international trade restrictions. Others are more cyclical and include the effects of sharp interest rate increases and liquidity withdrawals by central banks intended to rein in inflation. Rising public debt is also resulting in governments withdrawing the fiscal support they extended during the pandemic.

The latest World Economic Outlook, published by the International Monetary Fund (IMF) in January 2024, estimated global economic growth from 2022 to 2023 to be 3.1%, down from 3.5% in 2022 and 6.3% in 2021. Advanced economies continue to drive the decline in global growth, with weaker manufacturing offsetting stronger services activity. The slowdown was pronounced in Europe, while the USA remained relatively resilient. Developing economies, on average, have experienced stable growth over 2022-2023, although with sizeable shifts across regions. China experienced relatively strong growth, despite headwinds from its real estate crisis and weak consumer confidence.

Looking to 2024, the IMF's projections for the global economy are consistent with a soft landing, with inflation declining and growth holding up despite the rise in interest rates. But there are several downside risks to the outlook. These include: volatile commodity prices amid geopolitical and climate change risks; and upward surprises in inflation and a corresponding tightening of financial conditions and fiscal consolidation that could weigh on growth. The IMF projects global growth to be around 3% over the medium term (2024-2028) – below the historical average of 3.8% over the past two decades. In the context of geopolitical risks, this is in an environment where interest rates are expected to be higher for longer.

Global prices, demand and supply

The following table provides an overview of the main crude oil and natural gas price markers to which Shell is exposed:

Oil and gas average industry prices [A]





Brent ($/b)




West Texas Intermediate ($/b)




Henry Hub ($/MMBtu)




EU TTF ($/MMBtu)




Japan Customs-cleared Crude ($/b) – 3 months





Yearly average prices are based on monthly average spot prices. The 2023 average price for Japan Customs-cleared Crude is based on available market information up to the end of the period.

Crude oil and oil products

The global benchmark oil price Brent averaged about $83 per barrel (bbl) in 2023, down from $101/bbl in 2022. This reflected a normalisation of the market from the period of significant volatility in 2022. As trade flows adjusted after the disruption caused by the Russian invasion of Ukraine and more supply became available, supply security concerns have eased and the market balance loosened in 2023.

Global demand continued to recover in 2023, at a similar pace to 2022. Incremental demand has amounted to around 2.3 million barrels per day (mb/d), of which 1.7 mb/d came from China, where demand rebounded after the lifting of COVID-19 restrictions. However, demand growth in OECD markets, particularly OECD Europe, has moderated significantly because of slower economic growth.

Global supply increased by around 1.9 mb/d in 2023, slightly slower than demand growth. Most of the non-OPEC growth has come from the USA and Brazil, which accounted for around 1.5 mb/d and 0.4 mb/d, respectively. Iran, which is exempt from the OPEC production cut, has also markedly ramped up supply. To balance the market, OPEC+, led by Saudi Arabia and Russia, implemented a series of moves to limit the supply available to the market. In April 2023, OPEC+ announced a 1.66 mb/d voluntary production cut. This was followed by an additional 1 mb/d voluntary cut by Saudi Arabia from May, which was eventually extended through to the first quarter of 2024, with possibility for a further extension. Russia also announced a production cut of 500 thousand barrels a day (kb/d) for March through to the end of 2023, in addition to a 300 kb/d exports reduction from September to the end of the year. The actual crude output from Saudi Arabia and Russia dropped by around 1 mb/d and 0.2 mb/d, respectively in 2023 compared with 2022, based on the IEA estimate.

In 2024, the expected economic slowdown and potential supply disruptions caused by geopolitical tensions could impact demand. Macroeconomic risks and demand concerns had already started weighing on the market from the fourth quarter, with Brent dropping by $16/bbl by the end of 2023 from the year's peak. The instability in the Middle East remains a significant risk factor. As of now, conflicts in the vicinity of key oil trade routes, such as the Red Sea, have not yet caused severe disruption to supplies. But the risk of disruption could increase if the Israel-Hamas war escalates into a regional conflict.

Natural gas

Gas market

Weak demand, combined with high inventories, has put downward pressure on natural gas prices in key markets in 2023. Although prices were lower than 2022 levels, they remained elevated versus historical levels and continued to show strong volatility.

Title Transfer Facility (TTF): In Europe, TTF spot prices averaged $13.15/MMBtu (62% lower year-on-year). Strong LNG imports and weak regional demand enabled European inventories to reach 110 billion cubic metres (bcm), almost 100% full at the end of October. By year-end, inventories fell to 95 bcm (86%), which is still a comfortable level for that time of the year. Despite storages at multi-year highs, supply-side risks in the Middle East, and the threat of renewed industrial action in Australia, increased price volatility in October, with spot TTF prices surging to $17.0/MMBtu by the middle of the month, a 40% increase from the start of the month. By year-end, prices retreated to $12.66/MMBtu as Egyptian exports and Israeli pipeline flows resumed and inventories remained elevated.

Japan Korea Marker (JKM): Spot LNG prices in Asia followed a similar trajectory as in Europe, averaging $14.03/MMBtu (48% lower year-on-year). LNG demand in China remained subdued in 2023, relative to previous years. The return of incremental nuclear capacity in Japan has kept inventories at elevated levels through much of the year, capping the upside in prices.

Henry Hub: Henry Hub gas benchmark prices in North America had a less volatile year compared with 2022. Spot prices ranged from $1.77/MMBtu to $3.77/MMBtu with an average of $2.54/MMBtu. The lower volatility was attributable to a warm first quarter, cool second quarter, stronger-than-expected dry gas production, an increase in LNG facility maintenance and a continued storage surplus. Temperatures in the first quarter averaged near three degrees warmer than normal. Temperatures in the second quarter averaged one degree cooler than normal. Winter 2023-2024 has been considerably warmer than the 10-year normal. In 2023, natural gas dry production averaged 101.45 billion cubic feet a day (bcf/d) or 4.37 bcf/d above 2022. In the summer of 2023, natural gas storage in the 48 lower states of the USA averaged 467 bcf higher than in the summer of 2022.

The market is expected to remain loose through the remainder of the 2023-2024 winter as production slowly increases and LNG export facilities undergo maintenance. The bearish sentiment is expected to continue into the summer of 2024, which is reflected by the softness of the prices seen in summer futures contracts on the New York Mercantile Exchange (NYMEX).


United States: US power prices were largely lower across all major markets in 2023 compared with 2022. One of the key drivers for the overall lower power prices and volatility in 2023 was the decline in gas prices. After a volatile 2022, where prices ranged from below $4/MMBtu to nearly $10/MMBtu, Henry Hub, the benchmark gas price in North America, stayed mostly below $3/MMBtu for most of 2023. Power price volatilities were largely driven by weather events throughout the year and across the country. For the western part of the USA, colder than normal temperatures that started in December 2022 lingered through March, resulting in strong prices in Mid-C (Mid-Columbia) ($108/MWh) and CAISO (California) ($92/MWh) in the first quarter of 2023. For the eastern part of the USA, a combination of a warm winter and mild summer brought stable prices across the PJM and MISO (Midcontinent) markets. For Texas, record-breaking summer temperatures resulted in strong price performance. ERCOT (Texas) market prices spiked over $5,000/MWh in June, August and September, with On-Peak prices averaging $282/MWh for August and $121/MWh for September.

Europe: European power prices came down from the record levels in 2022, but were still elevated. In Germany, for example, the average power price in 2023 was around $103/MWh, down from an average price of $248/MWh in 2022. German power prices were still significantly higher than the average price of $38/MWh in the period 2015-2019. Power prices are primarily driven by natural gas prices, which were lower in 2023 than in 2022, but still more than double the average of around $5.6/MMBtu between 2015 and 2019. In addition, the availability of both hydropower and French nuclear power plants was markedly better in 2023 than in 2022, resulting in lower power prices. The continued deployment of solar and wind capacity is progressively affecting power system operations, which can be seen from the impact of weather on hourly prices.

Australia: The power and gas markets in Eastern Australia began 2023 with firm price caps on gas and coal after extreme price volatility in 2022. This – combined with lower demand because of milder winter weather, improved coal generator availability and continued growth in renewable generation – reduced tightness in international markets. Healthy domestic gas storage and stronger winter flows from LNG producers to southern markets moderated gas and power prices as they returned to normal levels. Prices, however, continued to be higher than historical levels. Power prices averaged around A$90/MWh for 2023 compared with A$190/MWh in 2022 and A$75/MWh in 2021. Gas prices averaged around A$12/GJ (gigajoule) for 2023 compared with around A$40/GJ in 2022 and A$10/GJ in 2021. There has also been increased intraday volatility, as more renewables and distributed solar have entered the system to replace coal.

Crude oil and natural gas price assumptions

Our ability to deliver competitive returns and pursue commercial opportunities depends on the accuracy of our price assumptions. We use a rigorous assessment of short-, medium- and long-term market uncertainties to determine what ranges of future crude oil and natural gas prices to use in project and portfolio evaluations. Market uncertainties include, for example, future economic conditions, geopolitics, actions by major resource holders, production costs, technological progress and the balance of supply and demand.

See "Risk factors" and Note 12 to the "Consolidated Financial Statements".

Refining and chemical margins

In 2023, gross refining margins continued to be well-supported, albeit at a lower level than the highs seen in 2022. The effect of sanctions on Russian oil products meant that Europe was short of middle distillate, leading to low stocks and very high middle distillate product crack spreads. This was exacerbated by refinery slowdowns during the hot European summer as cooling systems struggled to cope. In addition, there were low US gasoline stocks at the start of the US summer holiday season when demand was rising as many more people were driving. This led to a wider spread between gasoline and crude in the Atlantic basin. In the East, Chinese oil demand growth was capped by the economic slowdown. The low product stocks of gasoline and diesel in the Atlantic basin required product flow from Asia providing margin support for Asian refineries outside of China. But this was dampened by Chinese product export quotas which remained at the same elevated level as in 2022. In 2023, new refinery capacity – such as the Al Zour refinery, the Beaumont expansion and Oman Duqm refinery – came on line and increased product supply to the market, keeping margins at a lower level than in 2022.

For 2024, further new refinery capacity, such as that from Dangote in Nigeria, is expected to come on line. Meanwhile, demand growth is expected to slow with China's economic outlook being a key factor. Currently, product stock levels in the Atlantic basin of mogas and diesel are at higher levels than a year ago, suggesting lower spreads between products and crude oil next year.

Chemical cracker margins remained pressured in 2023 because of global oversupply and weak demand. Slowing global market conditions, and high inflation and interest rates, have impacted end-consumer demand. New capacity growth, primarily in Asia and the USA, led to global oversupply with producers continuing to match demand through lower cracker utilisation. The Russia-Ukraine war and conflicts in the Middle East have impacted energy prices, resulting in lower margins.

The outlook for petrochemical margins in 2024 and beyond depends on feedstock costs and the balance of supply and demand. Global oversupply is expected to persist through the year with a slow demand recovery. A recovery in demand is needed to absorb excess capacity. The supply of petrochemicals will depend on how new facilities coming on line and plant closures will impact net capacity, with utilisation balancing the system. Product prices will reflect the cost of raw materials, which is closely linked to crude oil and natural gas prices.

Refining margins

Global indicative refining margin [A]









Indicative refining margin





The Indicative refining margin (IRM) is an approximation of Shell's global gross refining unit margin, calculated using price markers from third-party databases. It is based on a simplified crude and product yield profile at a nominal level of refining performance. The actual margins realised by Shell may vary due to factors including specific local market effects, refinery maintenance, crude diet optimisation as the crudes in the IRM are indicative benchmark crudes, operating decisions and product demand. Gross refining unit margin is defined as the hydrocarbon margin net of purchased/sold utilities, additives and relevant freight costs, divided by crude and feedstock intake in barrels. It is only applicable to the impact of market pricing on refining business performance, excluding trading margin.

Petrochemical margins

Global indicative chemical margin [A]









Indicative chemical margin





The Indicative chemical margin (ICM) is an approximation of Shell's global chemical margin performance trend (including equity-accounted associates), calculated using price markers from third-party databases. It is based on a simplified feedstock and product yield profile at a nominal level of plant performance. The actual margins realised by Shell may vary due to factors including specific local market effects, chemical plants maintenance, optimisation, operating decisions and product demand. Chemical unit margin is defined as the hydrocarbon margin net of purchased/sold utilities, additives and relevant freight costs, divided by a nominal denominator expressed in metric tonnes. It is only applicable to the impact of market pricing on Chemical business performance.

The statements in this "Market overview" section are forward-looking statements based on management's current expectations and certain material assumptions and, accordingly, involve risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied herein.

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International Energy Agency
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liquefied natural gas
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million British thermal units
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megawatt hours
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Organisation for Economic Co-operation and Development
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Organization of the Petroleum Exporting Countries
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12 members of the OPEC and 11 other non-OPEC members
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million barrels per day
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per day
volumes are converted into a daily basis using a calendar year
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