Shell reported its strongest refining margin on record at $42 a barrel for the third quarter, a steep climb from $24 in the previous period and above its prior high set in 2022. The company pointed to a global squeeze in fuel availability, with refined products outperforming crude prices, as the key driver.
Shell said the market has been tightened by issues that crimped fuel flows from both the Middle East and Russia. Hits to refinery capacity in those regions, plus trouble moving fuel cargoes out of the Persian Gulf, propelled product prices - notably diesel - much higher than crude. That backdrop encouraged refiners in other regions to run harder to fill the gap.
Refining margins decide what oil majors earn far more than crude prices do. Market Briefs covers energy earnings free every weekday.
Shell ran its own plants near the ceiling, with utilization reaching as much as 97% during the quarter. Even so, that rate was slightly below the prior period, partly because exceptionally shallow water on the Rhine in Germany, a key route for crude and fuels, forced reduced processing at a plant there. On Wednesday, the shares climbed as much as 1%, and at 10:17 a.m. in London they were 0.9% above the prior close.
The update offers an early read on a choppy quarter for Big Oil, with Brent swinging from $71 to just above $100 per barrel as conflict in the Middle East persisted. Shell said its oil and gas trading performance was in line with the strong prior quarter, and that the turmoil across energy markets created opportunities for its large trading arm. The company intends to roll out its comprehensive earnings report on Oct. 29.
For your wallet, the takeaway is simple: when fuel markets are tight, refiners tend to capture more value than upstream producers. If crude keeps whipping around while product supplies stay constrained, that setup can linger.
Record margins mean supply is tight somewhere in the chain. Join Market Briefs free and follow the squeeze.
