Shell Flags $42 Q3 Refining Margin, Up From $24, as Middle East Conflict Tightens Fuel Markets

SentiSense · Published Oct 7, 2026, 2:23 AM ET · Updated Oct 7, 2026, 2:09 PM ET

Shell's third-quarter update note puts its indicative refining margin at $42 a barrel, up from $24 in the second quarter, a level Reuters described as a record as the Middle East conflict tightened fuel supplies. Integrated Gas production guidance rose to 740-780 kboe/d, mainly because the ARC Resources acquisition completed on Sept. 2, while chemicals margins and marketing earnings are expected to fall from Q2. Shell reports full results on Oct. 29.

SHEL said in its third-quarter update note on Wednesday that its indicative refining margin rose to $42 a barrel from $24 in the second quarter. Reuters called it a record high, driven by the Middle East conflict tightening fuel supplies, and Bloomberg noted it far exceeds the previous quarterly high set in 2022. The note itself gives the figures without calling them a record.

Shell also raised its Integrated Gas production guidance to 740-780 kboe/d, from 631 kboe/d actually produced in the second quarter. Most of that increase reflects the ARC Resources acquisition, which completed on Sept. 2, not a step-up in existing assets. LNG liquefaction is guided at 7.2-7.6 million tonnes, slightly below the second quarter's 7.7. On trading, Bloomberg reported that Shell expects strong oil trading results. Shell's note guides trading and optimisation in both Integrated Gas and Chemicals and Products in line with a second quarter that, per Reuters, produced $9.8 billion of adjusted earnings, Shell's second-highest quarterly profit on record.

The note also has offsets that the headlines leave out. The indicative chemicals margin falls to $208 a tonne from $270, marketing adjusted earnings are expected to be lower than in Q2, and refinery utilisation slips to 93-97% from 102%, partly because low Rhine water levels are limiting the Rheinland refinery. Shell also flags a roughly $2.5 billion cash outflow tied to the timing of German emissions-certificate payments and about $0.3 billion of exploration well write-offs. Trade press framed the fuel shortage as a direct earnings tailwind for the company.

What to watch: the full results on Oct. 29 will show how much of the margin jump reached the bottom line after lower utilisation, and whether the cash outflow weighs on buybacks. The tailwind depends on fuel markets staying tight: Reuters reports the G7 agreed last week to release diesel and crude from emergency reserves, which could narrow margins if supply eases.