Shell sees refining margins hitting record high in third quarter

Shell expects third-quarter refining margins to jump ‌to $42 a barrel, a record high and sharply above $24 a barrel in the previous quarter, the oil major said on Wednesday.

Global benchmark Brent crude prices surged after the US and Israel attacked Iran in late February, ‌prompting Tehran to effectively shut the Strait of Hormuz and attack Gulf neighbours. Major oil companies are expected ‌to reap a multibillion-dollar windfall from the conflict as higher energy prices boost revenues.

Results from Shell's large gas and oil products trading businesses are expected to be in line with the previous quarter, when they helped the company deliver its second-highest quarterly profit on ⁠record. Shell raised ​its third-quarter integrated gas ⁠production forecast to between 740,000 and 780,000 barrels of oil equivalent per day, from a previous estimate of 570,000 to 630,000 boed.

The ⁠company produced 631,000 boed in the second quarter, compared with more than 900,000 boed before the Iran war. Third-quarter liquefied ​natural gas production is expected to be around 7.2 million to 7.6 million metric tons, compared with ⁠a previous forecast of 7.1 million to 7.7 million tons and second-quarter output of 7.7 million tons.

The integrated gas outlook includes ⁠Shell's $16.4 ​billion acquisition of Canadian energy company ARC Resources, which was completed on September 2, the company said. Shell also narrowed its third-quarter upstream production forecast to between 1.74 million and 1.84 million boed, from a previous ⁠expectation of 1.68 million to 1.88 million boed.

Refinery utilisation at Shell's chemicals and products unit, which includes ⁠its large oil trading ⁠business, is expected to be lower in the third quarter than in the second quarter because low Rhine water levels are affecting utilisation at its Rheinland refinery.