Global fuel shortages have driven refined-product prices sharply higher, leading Shell to anticipate record profits in its refining business for the third quarter. The energy company projects refining margins to soar to approximately $42 per barrel for the July-September period, a significant increase from the $24 per barrel reported in the second quarter. This projection surpasses the previous record of around $28 per barrel, which was set during the onset of the Russia-Ukraine conflict.
The increased profitability for refineries comes from a widening gap between the costs of crude oil and the prices of refined fuels. Contributing factors include damage to refineries in the Middle East and Russia, which has constrained global fuel supplies, even as crude oil prices have moderated from earlier surges. During the third quarter, the global benchmark Brent crude averaged $85.60 a barrel, a decrease from $97.05 in the second quarter but still higher than the $68.14 average in the same period last year.
Diesel prices have also experienced a noticeable rise, with the premium over the global oil benchmark surpassing $100 a barrel for the first time. These conditions have created particularly advantageous circumstances for refineries located in Europe and the United States.
In addition to its refining business, Shell expects an increase in gas production following its acquisition of Canada’s ARC Resources. The company’s production is forecasted to reach between 740,000 to 780,000 barrels of oil equivalent per day, compared to an earlier estimate ranging from 570,000 to 630,000 barrels per day.