Shell Flags Weaker Third-Quarter Refining Margins, Chemical Loss

(Bloomberg) -- Shell Plc saw refining margins decline in the third quarter and expects to lose money in its chemicals business, a performance that reflects the broader weakening of the economy. 

The margin earned for refining crude dropped 29% in the period to $5.50 a barrel, Shell said in a statement on Monday. That metric actually ticked higher for chemicals, but the company nevertheless said it expects a “marginal loss” in the business. 

Shell’s largest rival, Exxon Mobil Corp., warned last week that lower oil prices and weaker refining margins would curb its third-quarter earnings by $1.6 billion. Brent crude, the international benchmark, plunged by 17% in the period amid growing concerns about the strength of China’s economy. 

The unexpected weakness in what is typically one of the strongest seasons for demand has forced big players in the oil market to adjust, with the Organization of Petroleum Exporting Countries and its allies delaying the restart of some idle production. Prices have since rebounded due to tensions in the Middle East. 

While the international majors are braced for weaker profits, there’s so far no sign that they’ll curtail returns to investors. French oil and gas producer TotalEnergies SE has pledged to maintain buybacks and keep boosting dividends next year thanks to the roll-out of new projects.

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