Shell refining margins reach record highs as wars hit supply

Fuel prices at the pump have surged in recent months, particularly for diesel, which is hitting record highs. A Shell logo is displayed at a gas station in London on March 8, 2022. (AP Photo/Frank Augstein, File) (AFP) — British energy giant Shell said Wednesday that its refining margins surged 75% in the third quarter compared with the second as wars in the Middle East and Ukraine disrupted supplies. These margins — reflecting the difference between the price of crude oil and the fuels derived from it — reached $42 per barrel in the July-September period, up from $24 per barrel between April and June, Shell said in a trading statement ahead of its full third-quarter earnings report. At $42, the level is far above the previous record set in 2022 following the invasion of Ukraine by key energy producer Russia, according to Bloomberg. Shell and other oil majors are seeing “an unprecedented widening of the refining spread,” said Kathleen Brooks, research director at trading group XTB. Fuel prices at the pump have surged in recent months, particularly for diesel, which is hitting record highs. While crude oil volumes from the Middle East have recently risen, the production and export of refined products in the region remain heavily disrupted. Logistical constraints have complicated the rerouting of fuel supplies, widening the gap between crude oil prices and refined products. At the same time, Ukrainian drone strikes on Russian energy infrastructure have prompted Russia — a major player in the oil market — to ban exports of certain products, notably gasoline and diesel. Refineries unaffected by the conflict are benefiting from the tightening global supply of such products. “If oil flows from the Middle East are disrupted once more, or if there are more attacks on refineries or more refineries shut down, refining margins could move higher,” Brooks said. Shell’s share price was up 0.6% in midday trading in London, outperforming the benchmark FTSE 100 stock index, which was down 0.6%. Our weekly newsletter Closing Arguments offers the latest about ongoing trials, major litigation and rulings in courthouses around the U.S. and the world, while the monthly Under the Lights dishes the legal dirt from Hollywood, sports, Big Tech and the arts.