Shell expects refineries to almost double the profit from every barrel of fuel made

Shell’s refineries are expected to make almost double the profit from every barrel of fuel produced owing to record prices caused by shortages around the world.In a market trading update on Wednesday, the energy supermajor forecast profit margins of $42 a barrel in the July to September period, far above the $24 a barrel of the second quarter and the previous high of about $28 in mid-2022.The margins reflect the steep increase in the price of refined fuels, including diesel, relative to the cost of crude oil, as the shutdown of war-damaged refineries in the Middle East and Russia squeezes supplies.The Middle East crisis helped Europe’s biggest oil and gas company to a profit of almost $10bn (£7.5bn) for the second quarter of 2026, more than double the figure for the same period last year and its second highest quarterly earnings on record.The market value of Shell, now the second largest company on the UK’s FTSE 100 index, climbed to a record high of £36.23 a share at the end of last month.That share price was reached despite oil prices retreating from their 2026 peak of above $115 a barrel in spring to about $100. It was lifted by European gas prices, which doubled from the previous year over the summer, and record high diesel prices.Global oil prices were slightly lower in the third quarter of the year. Brent crude averaged $85.60 a barrel, compared with $97.05 in the second quarter, but still well above the $68.14 recorded in the third quarter last year.The diesel price premium over the global oil benchmark jumped above $100 a barrel for the first time, indicating record high profits from refining crude into fuels.Shell operates some of Europe’s largest refineries alongside the French energy company TotalEnergies, which has the continent’s largest refining capacity.TotalEnergies’ chief executive, Patrick Pouyanné, welcomed the opportunities created by the global energy crisis.He told an industry conference in London this week: “We’re doing really well by being integrated. Integration means your refineries in Europe, which you thought were liabilities, are suddenly becoming goldmines.”skip past newsletter promotionafter newsletter promotionEurope’s benchmark gas price index more than doubled to €70.50 (£60) in August. The price of gas reached an average of more than €48 a megawatt-hour in the second quarter before leaping to almost €64/MWh in the third quarter.Shell’s gas production has been hard-hit by the Iran crisis, which led to severe damage to one of its key gas processing facilities in the Gulf, cutting its prewar gas production of 900,000 barrels ⁠of oil ​equivalent ‌per day (BOED) by a third.Shell said on Wednesday that it expects gas production to climb to about 740,000 to 780,000 barrels ⁠of oil ​equivalent ‌a day, ‌up sharply from its previous forecast of 570,000 to 630,000 BOED for the quarter. It produced about 631,000 BOED in the second quarter.