Shell is set to record significantly higher profits from its refining operations as rising fuel prices and supply disruptions push refining margins to record levels.
The energy giant expects its refining margin to reach about $42 per barrel in the third quarter of 2026, up from $24 per barrel in the second quarter.
The projected margin is also significantly higher than the previous record of about $28 per barrel recorded during the early stages of the Russia-Ukraine war.
The increase has been driven by higher prices for refined products, particularly diesel, while crude oil prices have moderated following a partial recovery in Gulf oil exports.
However, damage to refineries in the Middle East and Russia has reduced global refining capacity, tightening supplies and pushing fuel prices higher.
Brent crude averaged $85.60 per barrel in the third quarter, down from $97.05 in the second quarter but above the $68.14 average recorded during the same period in 2025.
Meanwhile, the premium for diesel over the global oil benchmark rose above $100 per barrel for the first time, highlighting the exceptionally high returns available to refiners.
The favourable refining environment comes after Shell reported almost $10 billion in profit for the second quarter of 2026, more than double its earnings in the same period last year.
The company is also benefiting from higher European gas prices, which more than doubled over the summer to reach €70.50 per megawatt-hour in August.
However, Shell’s gas production has been affected by damage to a major gas-processing facility in the Gulf. The disruption reduced its pre-war gas production of about 900,000 barrels of oil equivalent per day by roughly one-third.
Shell expects third-quarter oil and gas production to rise to between 740,000 and 780,000 barrels of oil equivalent per day, following the completion of its acquisition of Canadian producer ARC Resources.
The acquisition is expected to add about 370,000 barrels of oil equivalent per day to Shell’s production capacity.
