Shell expects its indicative refining margin to have reached $42 a barrel in the third quarter, a sharp increase from $24 in the second quarter as disruptions to global fuel markets transformed the economics of refining.
The company disclosed the figure Wednesday in its third-quarter update ahead of full results scheduled for October 29.
The increase is particularly significant because crude and refined-product markets have diverged during the Middle East conflict.
Gulf crude exports have recovered substantially, but refined-product supply remains much more constrained. That has supported margins for refiners capable of maintaining operations while diesel, gasoline and jet-fuel markets remain tight.
Shell also raised its integrated-gas production outlook to between 740,000 and 780,000 barrels of oil equivalent per day.
That compares with 631,000 barrels per day in the second quarter and an earlier third-quarter outlook of 570,000 to 630,000 barrels per day, although the previous guidance excluded volumes from ARC Resources and Qatar.
LNG liquefaction volumes are expected at between 7.2 million and 7.6 million metric tons, compared with 7.7 million in the second quarter.
Upstream production is projected at between 1.735 million and 1.835 million barrels of oil equivalent per day.
The strength in refining is not translating uniformly across Shell’s downstream operations.
Refinery utilization is expected between 93% and 97%, below the second quarter’s 102%, with low water levels on the Rhine affecting the company’s Rheinland refinery.
Shell also expects its indicative chemicals margin to decline to $208 per metric ton from $270.
The figures provide an early look at how the energy shock is moving through the industry’s earnings structure.
Oil producers benefit from higher crude prices, but refiners can receive an additional earnings boost when shortages of finished fuels push product prices higher relative to crude feedstock costs.
Shell’s full third-quarter results on October 29 will show how much of the stronger margin environment translated into earnings and cash generation.
