Shell Sees Record Refining Margins as War Roils Fuel Markets

Shell Plc reported record refining margins in the third quarter as disruption to fuel supplies from the Middle East and Russia tightened the market.

The energy giant flagged a $42-a-barrel refining margin for the period, up from $24 in the second quarter and far exceeding the previous high in 2022.

The exceptionally strong margin reflects the squeeze on global fuel supplies, with gains in prices for products such as diesel far outpacing those in crude. Damage to refineries in Russia and the Middle East, as well as difficulties shipping fuels out of the Persian Gulf, have spurred oil companies to run plants elsewhere flat-out.

Shell’s refinery utilization was as much as 97% in the quarter, it said in a statement. That’s a slightly lower level than in the prior period, in part reflecting unusually low water levels on Germany’s Rhine River — a major transport artery for crude and fuels, which led to reduced processing at a plant there.

Shell’s shares rose as much as 1% on Wednesday, and were trading up 0.9% at 10:17 a.m. in London.

The trading update provides the first glimpse into Big Oil’s performance in a volatile quarter, when Brent crude swung between $71 and more than $100 a barrel as the conflict in the Middle East ground on. The months-long disruption to supplies has allowed Shell — which has a sprawling trading operation — to profit from the huge dislocations across energy markets.

Oil and gas trading in the third quarter was in line with the strong results of the prior three months, Shell said ahead of its full earnings statement on Oct. 29.

Read More: Shell Sees 3Q Integrated Gas Production 740,000 to 780,000 BOE/D