Shell plc forecast record refining margins of $42 per barrel for the third quarter of 2026, driven by severe global fuel shortages, disrupted Middle East supplies, and ongoing geopolitical conflicts, according to financial updates released on October 7, 2026. The projected margins nearly double the $24 per barrel recorded in the second quarter and comfortably surpass the previous high of $28 set for petroleum products, The Guardian reported.
Surging Fuel Prices Outpace Falling Crude Costs
The steep increase in refined fuel prices relative to crude oil costs underpins the projected margins. While Brent crude prices eased to an average of $85.60 a barrel in the third quarter compared with $97.05 in the second quarter, diesel price premiums over global oil benchmarks jumped above $100 a barrel for the first time, according to Oilprice.com.
Shell Refinery Utilization Drops as German Emissions Costs Rise
Refinery utilization at Shell dropped from 102% in the second quarter to a range of 93% to 97% in the third quarter, Oilprice.com reported.
Low water levels on the Rhine River impacted operations at the Rheinland refinery in Germany, while chemical margins are expected to decline and marketing earnings are projected to fall compared to the previous quarter, according to Pluang. Shell anticipates a cash outflow of approximately $2.5 billion related to the timing of German emissions certificate payments under the BEHG, according to an SEC filing.
Multibillion-Dollar ARC Resources Acquisition Boosts Gas Output
Shell raised its third-quarter integrated gas production forecast to between 740,000 and 780,000 barrels of oil equivalent per day (BOED), up from previous expectations of 570,000 to 630,000 BOED. The upward revision follows the early September completion of its $16.4 billion acquisition of Canadian energy company ARC Resources, which adds approximately 370,000 barrels a day of oil and gas production capacity and contributes a month’s worth of output to the third-quarter figures.
Strait of Hormuz Closures and European Supply Squeezes
The wider market disruption stems from the aftermath of United States and Israeli attacks on Iran in late February 2026, which prompted Tehran to effectively close the Strait of Hormuz and target Gulf neighbors. These events removed an estimated 7 million to 8 million barrels per day of refined petroleum products from the global market, according to Oilprice.com.
The resulting supply squeeze prompted G7 nations to agree to release emergency crude and diesel stocks. European benchmark gas prices more than doubled to €70.50 in August, while TotalEnergies Chief Executive Patrick Pouyanné told a London energy conference that integrated operations are turning previously burdensome European refineries into goldmines amid the crisis, The Guardian reported.
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