Shell, Europe’s largest oil company, indicated Thursday that it was continuing to profit handsomely from oil market conditions that have motorists screaming.
In a trading update, the company forecast that the profit margin it earns by refining crude oil into products like gasoline and diesel is likely to have nearly tripled in the second quarter to $28.04 a barrel, up from $10.23 a barrel in the January-March period. Shell said this was likely to add $800 million to $1.2 billion to the financial results to be reported later this month.
For the first quarter, Shell reported a record $9.1 billion profit, bolstered by high oil and gas prices. Analysts expect the company to report an even bigger profit, $10.8 billion, in the second quarter, according to FactSet.
Around the world, the prices of oil products like gasoline and diesel are being driven up by a lack of refining capacity that has been worsened by restrictions on exports from Russia. Those conditions are putting pressure on pump prices and consumers, even though crude oil has fallen from its highs. Therefining profits Shell is forecasting for the second quarter are more than six times greater than those of the period a year earlier.
Shell also said that because of higher forecasts for oil prices it would mark up the value of some oil fields on its books that it had previously written down. The company said that the increases might add as much as $4.5 billion to the value of these holdings. The company expects Brent crude, the international benchmark, to sell for $80 a barrel in 2023.
Soaring earnings for oil and gas firms, in the face of high inflation, prompted the British government in May to announce a windfall profits tax on the energy sector to help finance payments to households to ease the strain of rising prices.