Shell Reports Strong Quarter Fueled by High Energy Prices and Trading Gains
The energy giant anticipates another profitable period, bolstered by robust refining margins and increased gas production forecasts.
Shell is poised for another strong financial quarter, driven by significant gains in energy trading and increased gas production, according to recent company statements. The oil and gas major reported that its third-quarter oil and gas trading performance was consistent with the preceding three months, a period that saw Shell achieve its second-highest quarterly profit on record.
The company's refining margins have reached approximately $42 a barrel, nearly double the $24 a barrel reported in the second quarter. Refining margins represent the difference between the cost of crude oil and the selling price of refined fuels.
Shell has also revised its third-quarter gas production outlook upwards. The company now forecasts integrated gas production to range between 740,000 and 780,000 barrels of oil equivalent per day (BOED) for the period between July and September 2026. This updated forecast surpasses the previously projected range of 570,000 to 630,000 BOED and signifies an increase from the 631,000 BOED produced in the second quarter. The second quarter's output was affected by disruptions in the Middle East that impacted production in Qatar.
Liquefied natural gas production for the third quarter is expected to be between 7.2 million and 7.6 million metric tons. This is a slight adjustment from the earlier forecast of 7.1 million to 7.7 million tons and compares to 7.7 million tons produced in the second quarter.
The integrated gas outlook incorporates Shell's acquisition of Canadian energy company ARC Resources for $16.4 billion, a deal that was finalized on September 2. This acquisition is expected to contribute to the company's overall production figures.
Major oil companies have benefited from soaring Brent crude prices since February, following the closure of the Strait of Hormuz. Simultaneously, diesel prices in the UK have reached record highs, with drivers facing an average of £2 per liter at the pump. According to RAC Fuel Watch data, a 55-liter tank of petrol now costs £96.09, an increase of £23.03 since the beginning of the conflict in the Middle East. A similarly sized diesel tank costs £110.01, up £31.70 from February 28.
Shell's shares saw a modest increase of 0.38 percent, or 14.00 pence, trading at 3,665.00 pence. The company's stock has risen by over 30 percent in the past year.
In July, Shell announced that its second-quarter profits had more than doubled, attributing the surge to rising oil prices. The company reported profits of $9.84 billion for the April-to-June period, a significant increase from $4.26 billion in the same period last year.
Garry White, chief investment commentator at Raymond James, commented on the update, stating that the company is likely to exceed market expectations for the September quarter, similar to its second-quarter performance. He highlighted the benefits of Shell's integrated business model in capturing value during market volatility and noted the positive overall tone of the company's update, despite challenges in its chemicals division and some one-off charges.