Shell is poised to achieve record profits in its refining business for the third quarter as global fuel shortages continue to drive up refined-product prices. The energy giant forecasts refining margins of approximately $42 per barrel for the July-September period, a significant increase from $24 per barrel in the second quarter. This projection surpasses Shell’s previous high of about $28 per barrel, which was reached during the early stages of the Russia-Ukraine war.
The widening gap between crude oil costs and refined fuel prices has propelled refinery profitability. Contributing to the reduced global fuel supply are damages to refineries located in the Middle East and Russia, whereas crude oil prices have decreased from their earlier peaks. During the third quarter, the global benchmark Brent crude averaged $85.60 a barrel, a drop from $97.05 in the previous quarter, yet still higher than the $68.14 average recorded in the same period last year.
Diesel prices have also experienced a sharp increase, with the premium over the global oil benchmark surpassing $100 a barrel for the first time. This surge has created particularly advantageous conditions for refineries in Europe and the United States.
Additionally, Shell anticipates an increase in its gas production following its acquisition of Canada’s ARC Resources. The company forecasts gas production to be around 740,000 to 780,000 barrels of oil equivalent per day, a rise from its earlier estimate of 570,000 to 630,000 barrels per day.