Shell is anticipating record profits from its refining business in the third quarter as global fuel shortages drive up refined-product prices. The energy giant projects refining margins of approximately $42 per barrel for the July-September period, a significant increase from $24 per barrel in the previous quarter. This forecast surpasses the previous high of $28 per barrel recorded during the early stages of the Russia-Ukraine conflict.
The profitability of refineries has been bolstered by the widening gap between crude oil costs and refined fuel prices. Contributing to the reduced global fuel supplies are damage to refineries in the Middle East and Russia, while crude oil prices have seen a decline from earlier peaks. The global benchmark, Brent crude, averaged $85.60 a barrel in the third quarter, down from $97.05 in the second quarter, yet it remains above the $68.14 average from the same period last year.
Diesel prices have also experienced a surge, with the premium over the global oil benchmark exceeding $100 a barrel for the first time. This sharp increase has created particularly advantageous conditions for refineries in Europe and the United States.
In addition to its refining gains, Shell expects a boost in gas production following its acquisition of Canada’s ARC Resources. The company forecasts production levels between 740,000 and 780,000 barrels of oil equivalent per day, compared to earlier estimates of 570,000 to 630,000 barrels per day.