Shell Profit Jumps to $10.8 Billion as Refining Margins Hit All-Time High

Shell reported quarterly adjusted earnings of $10.81 billion for the period ending in September, nearly double the $5.43 billion recorded in the same quarter last year. The company announced the results on Thursday, attributing the surge to geopolitical instability that has driven up crude oil prices and tightened fuel supplies. This figure marks the highest profit for Shell since the second quarter of 2022, following Russia's invasion of Ukraine. The result exceeded the LSEG consensus estimate of $9.92 billion.

Refining margins reached an indicative $42 per barrel, surpassing the previous record of $28.04 per barrel set in the second quarter of 2022. CEO Wael Sawan cited strong operational performance despite "continued severe disruption to the global energy system." The company also increased its capital return to shareholders, launching a $5 billion share buyback program to be executed over the next three months, an increase from the $3 billion program in the prior quarter.

Financial metrics reflected improved liquidity and reduced leverage. Free cash flow rose to $16.3 billion from $10 billion a year earlier. Net debt decreased to $39.7 billion, down from $41.75 billion in the previous quarter. Shell also lowered its 2026 capital expenditure outlook to a range of $23 billion to $25 billion, previously set between $24 billion and $26 billion. Shell shares traded up approximately 3% in morning sessions, reaching an all-time high.

Maurizio Carulli, an equity research analyst at Quilter Cheviot Investment Management, noted the reduction in net debt was notable given Shell recently completed a $16.4 billion acquisition of Canadian energy firm ARC. Carulli stated the performance was impressive across all divisions and predicted further small acquisitions rather than a major portfolio restructuring. Shell recently sold its Indian wind and solar assets and is reportedly exploring a sale of its UK-based chemicals joint venture with Exxon.

Competitor TotalEnergies also reported strong results, with adjusted net income more than doubling to $9.1 billion for the third quarter. CEO Patrick Pouyanne cited "historically high refining margins in Europe and worldwide" as a key driver. The global energy market has experienced high volatility due to the U.S.-Israeli war with Iran and attacks on shipping in the Strait of Hormuz, which have curtailed Gulf exports.

Brent Crude traded at approximately $114 per barrel on Thursday, up from around $65 per barrel a year ago. A global shortfall in refining capacity, worsened by strikes on Russian refineries, has increased the prices of gasoline, diesel, and jet fuel. The Group of Seven nations agreed to release emergency diesel stocks earlier this month as rising pump prices affect consumers. Tensions in the Middle East remain elevated, with the U.S. and Iran reportedly considering the resumption of military strikes while Saudi Arabia faces fatal attacks by Houthi militants.