Shell anticipates its refining business to achieve record profits in the third quarter, driven by global fuel shortages that have significantly increased refined-product prices. The energy giant has projected refining margins to reach approximately $42 per barrel for the July-September period, a substantial rise from $24 per barrel recorded in the second quarter. This new estimate surpasses the previous high of around $28 per barrel set during the early phases of the Russia-Ukraine conflict.
The profitability of refineries has been bolstered by the widening margin between crude oil costs and refined fuel prices. This situation has been exacerbated by damage to refineries in the Middle East and Russia, which has curtailed global fuel supplies, even as crude oil prices have declined from earlier peaks. In the third quarter, the global benchmark Brent crude averaged $85.60 a barrel, down from $97.05 in the previous quarter, yet still above the $68.14 average from the same period last year.
Diesel prices have also experienced a sharp rise, with the premium over the global oil benchmark exceeding $100 a barrel for the first time. Such conditions have created highly favorable circumstances for refineries in Europe and the United States, according to Shell’s assessment.
In addition to its refining outlook, Shell is projecting an increase in its gas production following the acquisition of Canada’s ARC Resources. The company forecasts production levels to be between 740,000 and 780,000 barrels of oil equivalent per day, compared to its earlier estimate of 570,000 to 630,000 barrels per day.