Shell nearly doubled its quarterly profit year-on-year to $10.81 billion and saw record refining margins, the oil major said Thursday, as geopolitical turmoil drives up crude prices and creates a fuel squeeze.
Adjusted earnings, the company's measure of net profit, soared from $5.43 billion a year ago.
It was the strongest profit since the second quarter of 2022, in the wake of Russia's full-scale invasion of Ukraine. Analysts expected the figure to be $9.92 billion for July to September, according to an LSEG-compiled consensus.
Indicative refining margins were $42 per barrel, smashing the previous record of $28.04 per barrel in the second quarter of 2022, meeting the company's forecast from earlier in the month.
Shell's London-listed shares were up around 3% in morning trade, hitting an all-time high.
The company boosted its share buybacks, announcing a $5 billion share program to be completed over the next three months, up from $3 billion in the previous quarter.
CEO Wael Sawan said the company saw strong operational performance amid "continued severe disruption to the global energy system."
Other highlights from Q2:
- Free cash flow of $16.3 billion, up from $10 billion year-on-year.
- Net debt came at $39.7 billion, down from $41.75 billion in the prior quarter.
- Capital expenditure outlook for 2026 lowered to the $23 to 25 billion range from $24 billion to $26 billion.
The reduction in net debt was impressive given Shell completed a $16.4 billion acquisition of Canadian energy firm ARC to allow it to increase production, Maurizio Carulli, equity research analyst for global energy and materials at Quilter Cheviot Investment Management, told CNBC on Thursday.
Carulli said it was an impressive performance across all the company's divisions, noting he expected further "small bolt-on acquisitions" of attractive targets but not a major reshaping of its portfolio ahead. Shell recently offloaded its Indian wind and solar business and is reportedly looking to sell its UK-based chemicals joint venture with Exxon.
Refined product crunch boosts industry
France's TotalEnergies also benefited from market dynamics, more than doubling its adjusted net ​income to $9.1 billion in third-quarter results published Thursday.
While its oil trading activities were steady, the oil major was boosted by "historically high refining margins in Europe and worldwide," CEO Patrick Pouyanne said.
Crude oil prices have been highly volatile this year as exports from Gulf countries have been curtailed by the U.S.-Israeli war with Iran and attacks on ships in the Strait of Hormuz.
International benchmark Brent Crude was around $114 a barrel on Thursday, up from around $65 a barrel a year ago, despite continued efforts to maintain crude flows.
Tensions remain high across the Middle East, with the U.S. and Iran reportedly weighing the resumption of military strikes and Saudi Arabia rocked by fatal attacks by Houthi militants.
A global shortfall of refining capacity, exacerbated by strikes on Russian refineries, has meanwhile driven up the prices of products like gasoline, diesel and jet fuel. The Group of Seven nations earlier this month agreed to release emergency diesel stocks as surging pump prices are increasingly felt in consumer wallets.