Shell Profit Hits $10.8 Billion as Refining Margins Reach All-Time High of $42

Shell reported quarterly adjusted earnings of $10.81 billion on Thursday, nearly doubling the $5.43 billion recorded in the same period a year ago. The surge was driven by record high refining margins, which reached $42 per barrel. This figure shattered the previous peak of $28.04 set in the second quarter of 2022, marking the company's strongest profit since the energy shock following Russia's full-scale invasion of Ukraine in 2022. The result exceeded the $9.92 billion forecast by analysts.

The financial performance coincided with a sharp increase in crude oil costs due to ongoing conflicts in the Middle East. Brent Crude traded at approximately $114 per barrel on Thursday, up from about $65 a year earlier. These price increases stem from curtailed exports from Gulf nations caused by the U.S.-Israeli war with Iran and attacks on shipping in the Strait of Hormuz. A global shortfall in refining capacity, worsened by strikes on Russian facilities, has further driven up the cost of gasoline, diesel, and jet fuel.

In response to the strong results, Shell announced a $5 billion share buyback program to be executed over the next three months. This represents an increase from the $3 billion program in the previous quarter. The company also reported free cash flow of $16.3 billion, a substantial rise from $10 billion in the same period last year. Net debt decreased to $39.7 billion, down from $41.75 billion in the prior quarter, even after the completion of a $16.4 billion acquisition of Canadian energy firm ARC.

Shell Chief Executive Wael Sawan attributed the results to strong operational performance amid "continued severe disruption to the global energy system." The company lowered its 2026 capital expenditure outlook to a range of $23 billion to $25 billion, reducing the previous estimate of $24 billion to $26 billion. Maurizio Carulli, an equity research analyst at Quilter Cheviot Investment Management, described the reduction in net debt as impressive given the recent acquisition costs. He noted that while Shell may pursue small bolt-on acquisitions, a major portfolio reshaping is not expected immediately, although the company has recently sold its Indian wind and solar business.

Shell's London-listed shares rose approximately 3% in morning trade to hit an all-time high. The company's results align with broader market trends, as France's TotalEnergies also reported more than doubled adjusted net income to $9.1 billion for the third quarter. TotalEnergies Chief Executive Patrick Pouyanne cited "historically high refining margins" in Europe and worldwide as a primary driver of that growth. The G7 nations recently agreed to release emergency diesel stocks to counter the rising pump prices now affecting consumers.

Tensions in the region remain elevated, with the U.S. and Iran reportedly considering resuming military strikes. Meanwhile, Saudi Arabia faced fatal attacks by Houthi militants. These geopolitical developments continue to create a fuel squeeze, keeping pressure on global energy supplies and prices.