Shell’s refining margin for the third quarter has nearly doubled sequentially to hit a record high, which is set to combine with strong trading results and high oil and gas realizations to keep yielding windfall profits for the supermajor.
Shell expects its indicative refining margin for the third quarter to have jumped to $42 per barrel, up from $24 per barrel for the second quarter, the UK-based major said on Wednesday in its third quarter 2026 update note ahead of the full results release on October 29.
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.
For Shell, the refinery utilization rate dropped from 102% in the second quarter to an estimated 93% – 97% in the third quarter, as low water levels on the Rhine River impacted the utilization rate at the Rheinland refinery in Germany, the supermajor indicated in its update note.
Trading in the gas and fuel divisions is expected to be in line with the second quarter of the year, when Shell booked significantly higher trading profits on the back of soaring energy commodity prices.
While it expects lower oil production for the third quarter, Shell lifted its natural gas output guidance to include the acquisition of Canadian producer ARC Resources, which was completed in early September.
Gas production is now seen at 740,000 – 780,000 barrels of oil equivalent per day (boe/d) for the third quarter, up from 631,000 boe/d for the second quarter.
Another energy major, Norway’s Equinor, also guided on Wednesday for higher-than-previously expected earnings in its marketing, midstream, and processing division. Equinor expects “unusually strong European refining margins” and optimization in third-party LNG trading to boost profits for the division above the $400-million guidance.
By Tsvetana Paraskova for Oilprice.com
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