Shell expects a record $42 refining margin for a quarter in which crude got cheaper
Shell forecast a refining margin of $42 a barrel for July to September, almost double the $24 of the prior quarter and above 2022's high of about $28. The gain came from fuel prices outrunning crude, so diesel buyers now carry refinery risk on top of oil risk.
The Board Room · Leadership desk
What happened
- The Guardian links the margin to refined fuel prices rising faster than crude as war-damaged refineries in the Middle East and Russia stay shut and supplies tighten.
- Brent averaged $85.60 a barrel in the third quarter, down from $97.05 in the second but still above the $68.14 of a year earlier.
- Diesel's premium over the global oil benchmark rose above $100 a barrel for the first time.
- Low Rhine water after summer heatwaves forced Shell to cut runs at its Rheinland refinery in Germany, taking utilisation to 93% to 97% from 102%.
Why it matters
- What it costs cost Diesel buyers got none of the benefit of cheaper crude, because the refining margin rose $6.55 a barrel more than Brent's quarterly average fell.
- Who's exposed exposure Buyers supplied from inland German refineries carry river risk on top of the war-related shortage, since low water cut Shell's own runs in a quarter of record margins.
- Who has to decide decision Choosing fixed or floating diesel prices this quarter means choosing between locking in a spread set during a shortage and staying open to a margin already 50% above the 2022 peak.
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In Shell's third quarter, refined fuel and crude moved in opposite directions. The margin rose $18 a barrel, or 75%, from the second quarter [16], while the average Brent price fell $11.45, about 12% [18]. City AM describes the indicative margin as the gap between the cost of crude and the market value of finished fuels such as diesel and gasoline [4]. On that definition, any rise in fuel prices over the quarter came from the refining spread, because the crude underneath got cheaper [4][18]. Once the diesel premium passed $100 a barrel, it was larger than the quarter's average price of the crude it is made from [19].
One reading is that diesel is simply following an oil price that is still near $100 [1]. The two reports describe crude differently. The Guardian says oil has retreated from a spring peak above $115 a barrel [1]. City AM says it has "stubbornly held above three-digits" [2]. Both are describing the price now. The $42 margin came in a quarter when Brent averaged well under $100 [6], so a buyer watching the crude headline would have seen that cost fall while diesel set records [15]. British diesel passed 200p a litre for the first time last week [8].
The gain lands with companies that own refineries and sell the product. City AM reported that Shell's refining surge will help offset a softer chemicals division and absorb about $2.5bn of expected cash outflows for German emissions certificates [13]. TotalEnergies has the continent's largest refining capacity [14]. Its chief executive, Patrick Pouyanne, told an industry conference in London this week: "We're doing really well by being integrated. Integration means your refineries in Europe, which you thought were liabilities, are suddenly becoming goldmines." [10]
The record covers one quarter. Shell's $42 is a forecast, published in a trading update on Wednesday [3]. Neither report says when the war-damaged refineries will restart. Against the shortage, G7 leaders agreed on Friday to release emergency stocks of diesel and oil, a supply City AM put at 100m, to head off a supply crisis [11]. They said they would work with the International Energy Agency to ramp up releases "in light of ongoing market pressures" [11]. I think the third-quarter figures justify carrying diesel as its own budget risk, priced off the refining spread, for as long as those refineries stay shut.
What to watch
- Shell's full third-quarter results at the end of October, which will show whether realised refining earnings match the $42 indicative margin.
- Whether the G7 emergency release of diesel and oil stocks brings the diesel premium back below $100 a barrel.
- Restart dates for the war-damaged refineries in the Middle East and Russia.
Clarity's read
What the record supports and how the coverage leans. The claims behind it follow.
Reality
- Evidence70
- Adoption
- Not scored
- Hype gap+10
- Incentives55
- Confidence68
Claim ledger
Ranked by verification strength, evidence, and original report placement.
- [1]
Oil prices have retreated from their 2026 peak of above $115 a barrel in spring to about $100.
- [2]
The price of oil has "stubbornly held above three-digits."
- [3]
In a market trading update on Wednesday, Shell forecast refining margins of $42 a barrel in the July to September period, far above the $24 a barrel of the second quarter and the previous high of about $28 in mid-2022.
- [4]
Shell's indicative refining margin is the difference between the cost of crude oil and the market value of finished fuels like diesel and gasoline; Shell expects it to leap to $42 per barrel, nearly double the $24 recorded in the previous quarter.
- [5]
The margins reflect the steep increase in the price of refined fuels, including diesel, relative to the cost of crude oil, as the shutdown of war-damaged refineries in the Middle East and Russia squeezes supplies.
- [6]
Brent crude averaged $85.60 a barrel in the third quarter, compared with $97.05 in the second quarter, and $68.14 in the third quarter of last year.
- [7]
The diesel price premium over the global oil benchmark jumped above $100 a barrel for the first time.
- [8]
Diesel prices passed the 200p a litre mark in Britain for the first time ever last week.
- [9]
Summer heatwaves led to low water levels on the Rhine, disrupting supply chains and forcing Shell to curtail processing at its Rheinland refinery in Germany, pushing overall refinery utilisation down to between 93% and 97% compared with 102% in the second quarter.
- [10]
"We're doing really well by being integrated. Integration means your refineries in Europe, which you thought were liabilities, are suddenly becoming goldmines."
- [11]
G7 leaders agreed to release a 100m emergency supply of diesel and oil in a bid to stave off a brewing supply crisis, and said on Friday they would work with the International Energy Agency to ramp up releases from emergency stockpiles "in light of ongoing market pressures".
- [12]
Shell will release its full third-quarter results at the end of October.
- [13]
The surge in Shell's refining profitability will help offset softer performance in its chemicals division and absorb roughly $2.5bn in expected cash outflows tied to German emissions certificate payments.
- [14]
Shell operates some of Europe's largest refineries alongside TotalEnergies, which has the continent's largest refining capacity.
- [15]
Shell's share price was lifted by record high diesel prices, among other factors.
- [16]
Shell's indicative refining margin rose $18 a barrel, or 75%, from the second quarter to the third.
- [17]
The $42 forecast margin is 50% above the mid-2022 high of about $28.
- [18]
Brent's quarterly average fell $11.45 a barrel, about 12%, from the second quarter to the third.
- [19]
Once the diesel premium exceeded $100 a barrel, it was larger than the third-quarter average Brent price of $85.60.
- [20]
The refining margin rose $6.55 a barrel more than Brent's quarterly average fell.
Sources
2 independent publishers whose own reporting we read for this story.
- cityam.comShell eyes profit windfall from surging fuel prices
1 article · October 6, 2026
- theguardian.comShell refineries forecast to make double the profit from every barrel of fuel
1 article · October 7, 2026
Topics and entities
Entities
- Patrick Pouyanné
- TotalEnergies
- International Energy Agency
- Shell
- Brent Crude
- G7