Shell anticipates achieving unprecedented profit margins from its refining operations, with margins projected at $42 per barrel for the July-September period, substantially exceeding the previous record of approximately $28 per barrel established during the early phase of the Russia-Ukraine conflict.
The elevated margins reflect a widening gap between refined fuel prices and crude oil costs. While crude prices have moderated to approximately $100 per barrel following a partial recovery of Gulf oil exports, refinery damage in the Middle East and Russia has sustained elevated fuel prices. This disparity between input and output costs creates significant profit opportunities for refineries, particularly those located in the United States and Europe. The dynamics contributed to Shell’s second-quarter profit of nearly $10 billion, more than double the prior-year period and the company’s second-highest quarterly earnings on record.
Market conditions have been further strengthened by energy supply constraints. European gas prices doubled from the previous year during summer months, while diesel price premiums over global oil benchmarks exceeded $100 per barrel for the first time, indicating record refining profitability. Brent crude averaged $85.60 per barrel in the third quarter, down from $97.05 in the second quarter but significantly higher than the $68.14 recorded in the same period of the previous year.
Shell’s operations have been affected by regional disruptions. The company’s gas production capacity was reduced by approximately one-third due to damage to a key Gulf processing facility, though the acquisition of Canada’s ARC Resources, completed in early September, is expected to substantially offset this decline. Shell projects gas production of 740,000 to 780,000 barrels of oil equivalent per day going forward, a significant increase from previous forecasts, with the acquisition anticipated to add approximately 370,000 barrels daily to overall production.
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