Shell is pricing a far wider gap between crude oil and finished fuels than it saw in the previous quarter. The company told investors it expects third-quarter refining margins of $42 a barrel, against $24 a barrel in the previous quarter.
Refining margins measure the difference between the price a refinery pays for crude oil and the prices it receives for fuels including gasoline and diesel. The forecast follows a period of disruption in Middle East energy markets.
Brent crude prices surged after the US and Israel attacked Iran in late February. Iran then effectively shut the Strait of Hormuz and attacked Gulf neighbours, Shell said.
The margin outlook comes as Shell absorbs a major acquisition. It completed its $16.4 billion purchase of Canadian energy company ARC Resources on September 2.
Shell raised its forecast for integrated gas production to 740,000-780,000 barrels of oil equivalent per day, including ARC Resources. Its previous estimate was 570,000 to 630,000 boed.
The company produced 631,000 boed in the second quarter before the ARC acquisition. Shell had produced more than 900,000 boed before the Iran war.
Elsewhere, Shell narrowed its third-quarter upstream production range to 1.74 million-1.84 million barrels of oil equivalent per day.
It forecast third-quarter liquefied natural gas output of 7.2-7.6 million metric tons, slightly below the 7.7 million tons reported in Q2.
There are limits to the refining windfall. Shell expects lower utilisation at its Rheinland refinery than in the previous quarter because low water levels on the Rhine are disrupting operations.
Its refinery utilisation guidance for the third quarter is 93% to 97%. That is below its earlier outlook of 93% to 101% and Q2's 102%.
Shell said earnings from its large oil products and gas trading businesses should be in line with Q2. Chemicals earnings, however, are weaker at $208 a tonne from $270, and the company flagged about $0.3bn of well write-offs.
Full results are due on 29 October.
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