Shell is anticipating record profits from its refining operations in the third quarter, driven by global fuel shortages that have led to a sharp increase in refined-product prices. The energy giant projects refining margins of approximately $42 per barrel for the July-September period, a significant rise from $24 per barrel in the previous quarter, and well above the prior record of around $28 per barrel set during the early stages of the Russia-Ukraine conflict.
The boost in refinery profitability is attributed to the widening gap between crude oil costs and refined fuel prices. Contributing factors include damage to refineries in the Middle East and Russia, which has curtailed global fuel supplies, while crude oil prices have moderated from earlier peaks. In the third quarter, the global benchmark Brent crude averaged $85.60 a barrel, down from $97.05 in the second quarter, but still higher than the $68.14 average recorded during the same period last year.
Diesel prices have also seen a significant surge, with the premium over the global oil benchmark surpassing $100 a barrel for the first time. This increase has created particularly favorable conditions for refineries located in Europe and the United States.
Additionally, Shell expects an uptick in its gas production following its acquisition of Canada’s ARC Resources. The company forecasts production to reach between 740,000 and 780,000 barrels of oil equivalent per day, compared to an earlier estimate of 570,000 to 630,000 barrels per day.