Shell’s rapid growth to slow as weaker gas trading hits profits
Shell has signalled the breakneck growth that racked up record profits for the oil company earlier this year will slow as weaker gas trading and lower refining margins hit recent profits.
The oil company was criticised for making huge profits during the cost of living crisis as Russia’s invasion of Ukraine pushed up prices of oil and gas. But Europe’s largest oil and gas firm said on Thursday that margins in its refining business had nearly halved, hitting its third-quarter profits which are due to be announced later this month.
Oil prices have fallen back from about $120 a barrel in June to about $90 as concerns of a recession in Europe and rampant global inflation weighed on commodity prices. The Opec cartel of oil-producing nations and its allies on Wednesday agreed to cut oil production by 2m barrels a day to increase prices, angering the White House.
Shell said its refining margins in the three months to the end of September were about $15 a barrel, against $28 a barrel in the previous quarter. The company expects this to have a “negative impact of between $1bn and $1.4bn” on its third-quarter underlying profits.
Refining margins have been under scrutiny since the summer when the then former business secretary Kwasi Kwarteng ordered the Competition and Markets Authority to study the fuel retailing market. The CMA raised concerns over the size of the margins being taken by refineries.
Shell also said its chemicals business had been hit by a drop in the global demand for plastic, from $86 per tonne in the previous quarter to minus $27 per tonne over the last 12 weeks.
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