Record refining margins and higher LNG and gas prices boosted Shell’s third-quarter earnings to over $10.8 billion, nearly double compared to the same period last year, as the Middle East crisis squeezed fuel supplies and hiked oil and gas prices.
Shell on Thursday reported adjusted earnings of $10.814 billion for the third quarter, the highest since 2022, almost double the $5.432 billion earnings a year ago.
The third-quarter earnings “reflect strong operational performance in a continued volatile and elevated commodity price environment with record refining margins,” the supermajor said.
Shell’s global indicative refining margin almost doubled to a record high of $42 per barrel in the third quarter, up from $24 per barrel for the second quarter.
Shell had already guided earlier this month that its refining margin for the third quarter nearly doubled sequentially to hit a record high. The record refining margins, combined with strong trading results and high oil and gas realizations, yielded windfall profits for the supermajor.
Global refining margins have soared in the summer as limited flows of fuels from the Middle East and the Russian ban on diesel exports compounded the global fuel crunch. Refineries in the U.S., Europe, and Asia have been struggling – and failing – to offset what has been an estimated 7-8 million barrels per day (bpd) of refined petroleum products taken off the market.
Following the strong earnings, Shell raised its buyback program to $5 billion, from $4.2 billion of share buybacks announced with the second-quarter earnings and now completed. The new $5-billion share repurchase is expected to be completed by the Q4 results announcement early next year.
“Shell’s relentless focus on operational performance enabled very strong results in a quarter with continued severe disruption to the global energy system,” CEO Wael Sawan said.
Shell is not the only European major to announce bumper profits for the third quarter. Norway’s Equinor on Wednesday reported tripled adjusted net income, on the back of strong refining margins, high oil and natural gas prices, and increased hydrocarbon production.
By Tsvetana Paraskova for Oilprice.com
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