Shell sees refining margins hitting record high in third quarter

Shell anticipates its refining margins for the third quarter to reach an all-time high of US$42 per barrel, significantly higher than the US$24 per barrel recorded in the previous quarter. The oil giant attributed this surge to the increase in energy prices following the US and Israel's attack on Iran in late February, which led to Iran effectively closing the Strait of Hormuz and attacking neighboring Gulf countries.

Despite the conflict, Shell's gas and oil products trading businesses are expected to match the performance of the previous quarter, contributing to the company's second-highest quarterly profit on record. For the third quarter, Shell has raised its integrated gas production forecast to between 740,000 and 780,000 barrels of oil equivalent per day, up from the previous range of 570,000 to 630,000 boed.

The company's previous quarter saw production of 631,000 boed, compared to over 900,000 boed in the period preceding the Iran war. Liquefied natural gas production for the third quarter is projected to be around 7.2 million to 7.6 million metric tons, slightly lower than the previous range of 7.1 million to 7.7 million tons and the second quarter's 7.7 million tons.

The updated integrated gas outlook takes into account Shell's acquisition of Canadian energy company ARC Resources, completed on September 2, valued at US$16.4 billion. The company also revised its upstream production forecast for the third quarter to between 1.74 million and 1.84 million barrels of oil equivalent, down from the earlier range of 1.68 million to 1.88 million boed.

However, refinery utilisation at Shell's chemicals and products unit is anticipated to be lower in the third quarter compared to the second quarter, due to reduced Rhine water levels impacting operations at its Rheinland refinery.