Oil price fall wipes 17% off Shell profit

SHARES IN Shell slumped to their lowest level for more than a year yesterday, wiping nearly pounds 3bn from its market value, after the Anglo- Dutch oil group reported a steep fall in second-quarter profits.

Shell, the world's largest oil company, said a sharp drop in the price of crude in the period was behind a 17 per cent slump in profits to $1.54bn (pounds 940m) from $1.86bn in the period a year ago. A slowdown in demand in Asia after the region's economic turmoil was also to blame, the company said.

The profit downturn surprised the City, which had predicted figures of between of $1.59bn and $1.86bn, and sent the shares into free fall. They closed down 6.93 per cent at 356p, with more than 49 million shares traded.

"The quality of these figures is poor, and the company has a great deal of work to do to get these numbers up," said Jurjen Lunshof, an analyst with Credit Lyonnais Securities.

Shell said that, with oil prices at their lowest for more than a decade, the figures were to be expected. Maarten van den Bergh, the president, said he was not unsatisfied, and added: "The industry, and we too, have headwinds against us, but we remain on course."