Shipping Costs Jump to $25 a Barrel, Weighing on TotalEnergies’ Realized Liquids Prices
Key Facts
TotalEnergies’ shipping costs jumped to about $25 a barrel in the third quarter of 2026, from about $2 to $3 previously, and its chief executive said the increase was the main reason its realized liquids price fell by $6 a barrel from the second quarter. That puts transportation costs at the center of the explanation for the change in the French company’s realized liquids returns during the quarter. At Shell, shipping pressures appeared as a non-cash increase in the variable component of shipping contract liabilities, in the context of net debt. The increase does not represent a new cash expense or the total cost of chartering vessels. The two companies’ results show how disruption in the tanker market affects oil companies’ accounts, with different effects on each.
TotalEnergies’ chief executive estimated shipping costs at about $2 to $3 a barrel before they rose to nearly $25, and said the increase was the main reason the realized liquids price fell by $6 a barrel in the third quarter compared with the previous quarter. This links higher transport rates to the decline in the price the company realized for liquids, without implying that every component of its results moved in the same direction. Adjusted net income was $9.1 billion, while cash flow reached $12.3 billion in the third quarter. The company said its integrated model and geographic diversity supported these results. The figures show that shipping’s impact came alongside strong financial performance, rather than summarizing the quarter on its own.
Shell, meanwhile, recorded an $8 billion increase in cumulative shipping contract escalations in the first nine months of 2026 compared with the same period in 2025. The company does not disclose the absolute value of shipping charter costs for its long-term contracts to transport hydrocarbons, so the figure does not show the total amount it pays for them. In the third quarter, the non-cash increase in the variable component of these contract liabilities rose in the context of net debt. This came as Shell’s net debt declined quarter on quarter, separating the accounting effect of the liabilities from the direction of net debt during the period. Operationally, shipping costs weighed on Shell’s refining margins, while an increase in its global indicator refining margin provided support.
Shell’s global indicator refining margin was about $42 a barrel in the third quarter, compared with $24 in the second quarter and $11.6 in the third quarter of 2025. The higher margin supported earnings in its Chemicals and Products division, despite pressure from transport costs. In the tanker market, spot rates reached an all-time high in early October. The report attributed this to Middle Eastern producers increasing exports by using shuttle services and ship-to-ship transfers to move oil through the Strait of Hormuz, keeping vessels occupied. Thus, higher spot-market rates coincided with greater use of transport arrangements aimed at sustaining export flows.
Shell’s chief financial officer said the cost of a route from anywhere in the Middle East to China was about ten times its level roughly 12 months earlier. She added that the company expects charter costs to decline when shipping through the Strait of Hormuz returns to normal. That forecast links the trajectory of contract costs to the evolution of shipping traffic, while setting no date for a return to normal. In trading on Oct. 29, Shell shares rose about 2.9% in early trading after the results, outperforming a 0.7% gain in a broader European energy companies index. Its SHEL ticker closed at 105.19 on Oct. 28, compared with 104.78 in the previous session.
The TTE ticker closed at 92.88 on Oct. 28, after 92.35 the previous day. TotalEnergies announced $2.5 billion in share buybacks in the fourth quarter of 2026 and the first quarter of 2027, while maintaining its interim dividend at 0.90 euros a share. It also said its gearing ratio fell to below 10% at the end of the third quarter. Shell, meanwhile, announced a $5 billion share buyback program for the three months following its results announcement and set its 2026 cash capital expenditure range at $23 billion to $25 billion. These decisions put dividends and buybacks alongside the companies’ investments and elevated transport costs in the financial outlook ahead.