Shell (SHEL) expects Q2 oil-and-gas production volumes will decline due to Persian Gulf hostilities, but profit margins will swell, the energy giant reported Tuesday.

The company said Q2 natural gas production is expected to be 610,000 to 650,000 barrels of oil equivalent a day in Q2, down from 909,000 in Q1, "reflecting the impact on Qatari volumes."

In normal times, Qatar and Shell ship natural gas, in LNG form, through the Strait of Hormuz, which has been intermittently closed since early March.

However, earnings from "trading & optimization (in Q2) is expected to be significantly higher than Q1 26," added Shell, referring to profits on the trading of oil and gas.

Despite Strait of Hormuz snags, the globally active Shell reported it expects 1.75 million to 1.85 million barrel of oil equivalent per day of upstream production in Q2, largely unchanged from Q1.

Reflecting tight world energy markets, its indicated refining margin is expected to be about $20 a barrel in Q2, versus $17 a barrel in Q1, while the indicated chemical margin is expected at $240 a ton in Q2, versus $149 a ton in Q1, said Shell.

But the energy giant added that given "market dislocations, realized refining and chemicals margins are lower" than reported using standard calculations.

Shell reported that it paid $2.3 billion in taxes in Q1, but expects to pay between $2.6 billion and $3.4 billion in taxes in Q2.

Shell is slated to report Q2 financial results and earnings on July 30.