Business with scarcity: Iran war gives Shell a fabulous record in refining margin

Shell is benefiting from the tight supply of gasoline and diesel: the energy company's refining margin jumps by 75 percent within a quarter. The reasons are the Iran war and attacks on Russian energy facilities.

The British energy giant Shell is currently benefiting from significantly higher refining margins. In the third quarter, the margin grew by 75 percent compared to the previous quarter, Shell announced. The difference between the price of crude oil and the fuel produced from it in the refineries rose to $42 per barrel (159 liters); in the second quarter the margin was still $24.

According to the financial news agency Bloomberg, the current margin exceeds Shell's previous record, which was set in 2022 after Russia's attack on Ukraine. The current increase is being driven by the global upheavals resulting from the Iran war. Although crude oil volumes from the Middle East have recently increased, the production of refined products in the region and exports remain significantly more difficult.

This is widening the gap between crude oil prices and finished products while there is high global demand for refined products such as gasoline and diesel. In addition, Ukrainian drone attacks on Russia's energy infrastructure are also impacting available supply. Refineries that are not directly affected by the conflicts are benefiting from the increasingly scarce supply worldwide.

Shell and other oil majors are currently seeing an "unprecedented widening" of the spread between crude oil prices and refined products, said Kathleen Brooks, director of research at trade group XTB. "Should Middle East oil supplies be disrupted again, or should there be further attacks on refineries or further refinery closures, refining margins could rise even further," she added.