Global fuel shortages have led Shell to forecast record profits in its refining business for the third quarter, driven by a significant increase in refining margins. The energy giant expects these margins to reach approximately $42 per barrel for the July-September period, a substantial rise from $24 per barrel in the previous quarter and well above the earlier record of about $28 per barrel set during the initial phase of the Russia-Ukraine conflict.
This increase in profitability is largely due to the widening gap between crude oil costs and refined fuel prices. Contributing to the reduced global fuel supplies are damages to refineries in the Middle East and Russia, while crude oil prices have declined from their earlier peaks. During the third quarter, the global benchmark Brent crude averaged $85.60 per barrel, lower than the $97.05 in the previous quarter but still higher than last year’s $68.14 average for the same period.
The surge in diesel prices has also been notable, with the premium over the global oil benchmark exceeding $100 a barrel for the first time. This sharp rise has created advantageous conditions for refineries in Europe and the United States, further enhancing the profitability landscape for Shell’s refining operations.
In addition to refining, Shell anticipates an increase in its gas production following the acquisition of Canada’s ARC Resources. The company projects production levels to range between 740,000 and 780,000 barrels of oil equivalent per day, an increase from the prior estimate of 570,000 to 630,000 barrels per day.
