Shell expects record refining margin of $42 a barrel in third quarter
Key Facts
Shell expects its indicative refining margin to reach $42 a barrel in the third quarter of 2026, a level Reuters described as a record and equivalent to three to four times the level in the same period a year earlier. The figure was included in the company’s third-quarter outlook update published on October 7, not in a new review dated October 24. Reuters linked the improvement in fuel markets to supply disruption caused by the conflict in the Middle East. Wider margins should support refining activity, but other operational indicators paint a mixed picture of the company’s performance.
Production figures point to an expected decline in liquefied natural gas volumes to a range of 7.2 million to 7.6 million tonnes in the third quarter, compared with 7.7 million tonnes in the second quarter, Reuters reported. By contrast, Shell expects integrated gas production of between 740,000 and 780,000 barrels of oil equivalent a day. This guidance includes the acquisition of ARC Resources, which was completed on September 2. RBC analysts said the deal’s one-month contribution, alongside higher upstream production, could push guidance above market expectations. They added that trading results at the elevated levels seen in the second quarter could support cash generation.
In refining, Shell expects refinery utilization of between 93% and 97%, with the Rheinland refinery affected by lower water levels in the Rhine. Reuters said fuel supply disruption linked to the conflict in the Middle East supported fuel prices, while gas and products trading is expected to be at the previous quarter’s levels. But stronger refining margins are not extending across all activities: the company expects trading and optimization results in integrated gas, chemicals and products to be at the second-quarter level, while marketing adjusted earnings are expected to decline from that level. The outlook places strong refining performance alongside operational pressures and differing contributions from business segments.
Payment timing is another factor that could affect how the results are read. Shell expects a cash outflow of about $2.5 billion from operating cash flow before working capital, linked to the timing of German emissions certificate payments. This comes as markets monitor the ability of major oil companies to stick to existing spending plans, Reuters reported. The agency also cited HSBC’s expectation that Shell will announce a $3.5 billion share buyback for the fourth quarter. That figure remains the bank’s forecast, while the company will publish its third-quarter results and interim dividend announcement later in October.
Shell’s update comes amid broader energy market disruption: Reuters said the disruption to the Strait of Hormuz since U.S. and Israeli strikes on Iran began in February has pushed energy prices to their highest levels in several years and allowed trading desks to benefit from volatility. The shares closed at $108.18 on October 23, according to EL7 data. The available data for that day do not include a higher intraday price. These moves provide the market backdrop ahead of the results, but on their own do not determine how the operational outlook will affect the financial results.
Shell is scheduled to publish its third-quarter results and interim dividend announcement on October 29, 2026, at 07:00 GMT. Those results will provide the first opportunity to assess the expected $42-a-barrel refining margin alongside gas production, refinery utilization, marketing pressures and payments. HSBC expects a $3.5 billion buyback announcement for the fourth quarter. According to Shell’s schedule, the sterling and euro equivalents of the dividend will be announced on December 7. Investors will therefore be tracking operating results, cash flow and dividend details, which will be released according to the stated schedule.