Shell expects its refineries to generate substantially higher profits per barrel of refined fuel produced, according to a trading update released this week. The company forecasts profit margins of $42 per barrel for the July to September period, representing a significant increase from $24 per barrel in the preceding quarter and surpassing the previous record of approximately $28 per barrel established during the early stages of the Russia-Ukraine conflict.
The improved margins reflect a widening gap between refined fuel prices and crude oil costs. While crude oil prices have moderated to around $100 per barrel following a partial recovery in Gulf exports, warfare has damaged refining capacity in the Middle East and Russia, keeping fuel prices elevated. This divergence creates favorable conditions for refineries, particularly those in the United States and Europe. Shell itself reported nearly $10 billion in profit for the second quarter of 2026, more than double the year-earlier figure, supported by elevated energy prices and crisis-driven demand dynamics.
Shell’s stock price reached a record high of £36.23 per share at the end of the previous month, reflecting investor confidence despite crude prices retreating from a spring peak above $115 per barrel. The company’s valuation has been bolstered by surging European gas prices, which doubled compared to the prior year during summer months, and historically high diesel price premiums. Brent crude averaged $85.60 per barrel in the third quarter, down from $97.05 in the second quarter but substantially above the $68.14 recorded in the year-earlier period.
The diesel price premium over crude oil benchmarks exceeded $100 per barrel for the first time, signaling unprecedented refining profitability. TotalEnergies’ leadership emphasized that integrated energy companies are benefiting substantially from current market conditions, with European refineries previously viewed as financial liabilities now generating substantial returns.
Shell’s gas operations face headwinds from Middle East disruptions, with production cut by roughly one-third from prewar levels due to damage to key facilities. However, the company’s acquisition of Canada’s ARC Resources, completed in early September, is expected to increase combined gas production to 740,000 to 780,000 barrels of oil equivalent per day in the third quarter, representing a meaningful recovery from prior forecasts.
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