Oil majors reap bumper profits as Mideast war drives prices; Shell, TotalEnergies cash in

Shell and TotalEnergies reported exceptionally strong latest-quarter results because disrupted energy supplies pushed up oil, gas and refined-fuel prices. Repsol also benefited, but its reported figure covers nine months rather than only the third quarter. These results show how conflict-driven shortages can benefit major energy producers even as consumers face higher costs.

Shell’s profit after tax more than doubled year-on-year to US$12.1 billion in the third quarter. TotalEnergies posted a record US$8.3 billion for July through September. Repsol quadrupled net profit over the first nine months, reaching €5 billion. Shell also reported revenue of US$92.8 billion.

The companies benefited from higher prices, record refining margins and volatile oil and gas trading. Shell and TotalEnergies increased shareholder payouts, while critics argued that their gains added to public pressure over energy bills and inflation. Other major producers, including BP, Chevron and ExxonMobil, were due to report later.

The figures reveal the extraordinary scale of the energy companies’ gains during a period of conflict and supply disruption. Shell’s profit after tax more than doubled from a year earlier, while TotalEnergies reached its highest recorded net profit. Repsol’s result also surged, though its comparison covers the first nine months of the year.

Shell earned US$12.1 billion in the third quarter, equivalent to RM49.1 billion in the article’s figures. TotalEnergies earned US$8.3 billion between July and September. Repsol reported €5 billion, equivalent to RM22.7 billion, for the first nine months. Shell’s revenue also climbed sharply to US$92.8 billion.

These profits were supported by high fossil-fuel prices, strong refining margins and trading gains as futures prices swung sharply. Shell and TotalEnergies used the stronger results to increase shareholder payouts. The gains also intensified criticism because households and businesses were paying more for energy.

A war can disrupt production, exports, transport and refining across an energy-producing region. When fewer supplies reach global markets, prices rise. Energy companies that still have oil, gas or operating refineries can sell into that tighter market at higher prices. This explains why conflict can hurt consumers while improving producers’ earnings.

The article says Middle East disruptions pushed up hydrocarbon prices and refining margins. Refineries unaffected by the conflict benefited from tighter global supplies of refined products. Logistical constraints also made it harder to reroute fuel, widening the gap between crude oil prices and the prices of fuels made from it.

Shell’s refining margins reached US$42 a barrel, compared with US$24 in the previous quarter. TotalEnergies described the period as a high-price environment with historic refining margins and a strong gas market. Such conditions may not last, but they helped both companies raise shareholder payouts.

A refining margin measures the spread between what a refinery pays for crude oil and what it receives for products such as petrol and diesel. It matters because the spread indicates how much revenue refining can generate before other costs. A wider margin can sharply improve an energy company’s earnings.

During the conflict, Middle East production and exports of refined products were heavily disrupted. Refineries outside the conflict zone could sell into tighter markets. Logistical constraints made rerouting supplies difficult, so refined-fuel prices rose relative to crude oil. Ukrainian drone strikes on Russian energy infrastructure also contributed to product shortages after Russia banned some exports.

Shell’s margin reached US$42 a barrel in the third quarter, up from US$24 in April-June. Bloomberg reported that this surpassed the previous record set after Russia’s 2022 invasion of Ukraine. The article warns that these unusually favourable conditions may not continue indefinitely.

Oil and gas are central energy inputs, so price increases can affect households, businesses and transport. Families may face higher energy bills and more expensive fuel. Businesses also pay more to operate and move goods. These pressures can feed into wider prices, helping drive inflation and cost-of-living distress.

The article links Middle East supply disruptions with higher hydrocarbon prices and says rising energy bills and fuel prices at the pump are pushing up global inflation. It also describes protests in France and wider European discontent over living costs. Higher prices therefore create both economic and political pressure.

The effects are visible alongside the energy companies’ profits. Shell and TotalEnergies reported large gains, while governments sought to reduce consumer costs. France released diesel reserves and asked TotalEnergies to lower prices. The article does not quantify the full effect on every household, but it shows that relief may be smaller than governments expected.

Strategic diesel reserves are emergency supplies that governments can release when fuel markets are disrupted or prices become too high. The aim is to add barrels to the market, ease scarcity and reduce prices at filling stations. France used this measure because households and businesses were facing higher fuel costs.

The French government released 10 million barrels of diesel to distributors. It expected the move to cut pump prices by 12 to 18 cents per litre. TotalEnergies chief executive Patrick Pouyanne estimated that consumers would receive only an 8-to-12-cent reduction. The government therefore urged the company to pass on more of the benefit.

The episode shows that releasing reserves does not guarantee the full expected saving reaches drivers. Distribution, market conditions and company pricing affect the final result. France also asked TotalEnergies to keep capping prices for as long as necessary, while warning against reducing the debate to attacks on the company.

Crude oil is the unprocessed petroleum produced from oil fields. Refineries transform it into usable products, including petrol and diesel. Those products then move through transport and distribution networks to consumers and businesses. The system depends on each stage working smoothly, so a disruption can affect prices far beyond the original conflict zone.

The article focuses on the relationship between crude and refined fuels. A refining margin is the difference between crude’s price and the prices of fuels made from it. When Middle East exports and production of refined products were disrupted, unaffected refineries supplied tighter markets. Difficult rerouting widened the price gap and increased refiners’ earnings.

Other events added pressure. Ukrainian drone strikes affected Russian energy infrastructure, and Russia banned exports of some petrol and diesel. These constraints reduced available refined products and complicated logistics. The result was higher margins for some refiners, higher pump prices for consumers and stronger profits for major energy companies.