Shell warned the era of record profits was coming to an end as its refining and natural gas divisions were hit by lower oil prices and volatile energy trading on global markets.
The fossil fuel giant estimated that up to £1.2billion would be knocked off its earnings in the third quarter of the year – sending shares down 2.8 per cent.
Profit margins at its refinery business, which turns crude oil into petrol, diesel and other products, fell to $15 per barrel of oil from $28 in the second quarter.
Volatile trading: Fossil fuel giant Shell estimated that up to £1.2bn would be knocked off its earnings in the third quarter of the year – sending shares down 2.8%
The sharp drop came amid a decline in the price of Brent crude, which spiked to a 14-year high of nearly $128 a barrel in March following Russia’s invasion of Ukraine.
The price remained elevated until early June, allowing energy firms to rake in hefty profits.
Shell made a record profit of £8.1billion in the first quarter of 2022, a milestone it smashed just three months later by posting a second quarter profit of £10.2billion.
But Brent is now trading at around $94 a barrel amid fears a global recession will hit demand.
Meanwhile, Shell predicted results from its natural gas business would be ‘significantly lower’ than the previous quarter due to what it said was a ‘volatile and dislocated’ market and lower demand over the summer months.
Profit margins at the company’s chemicals division also collapsed, falling to minus $27 per ton compared to a positive $86 in the second quarter amid a fall in demand for plastics.
‘For all that Shell has benefited from the surge in energy markets in 2022, it is not immune from a slowdown which will impact demand for refined products,’ said AJ Bell investment director Russ Mould.
It has been a difficult week for Shell investors after outgoing boss Ben van Beurden warned that taxes on firms within the oil and gas industry are ‘inevitable’ to help the poorest in society.
There were signs Shell’s fortunes could improve towards the end of the year after the Opec+ cartel of oil-producing nations, which includes Russia and Saudi Arabia, announced larger than expected production cuts, which were expected to boost energy prices.
Jorge Leon, senior vice president of research firm Rystad Energy, predicted the planned cuts would push the price of Brent crude back to over $100 by December despite expecting Opec+ would only reduce production by 1.2m barrels of oil per day, as opposed to the planned decrease of 2m.
#fiveDealsWidget .dealItemTitle#mobile {display:none} #fiveDealsWidget {display:block; float:left; clear:both; max-width:636px; margin:0; padding:0; line-height:120%; font-size:12px} #fiveDealsWidget div, #fiveDealsWidget a {margin:0; padding:0; line-height:120%; text-decoration: none; font-family:Arial, Helvetica ,sans-serif} #fiveDealsWidget .widgetTitleBox {display:block; float:left; width:100%; background-color:#af1e1e; } #fiveDealsWidget .widgetTitle {color:#fff; text-transform: uppercase; font-size:18px; font-weight:bold; margin:6px 10px 4px 10px; } #fiveDealsWidget a.dealItem {float:left; display:block; width:124px; margin-right:4px; margin-top:5px; background-color: #e3e3e3; min-height:200px;} #fiveDealsWidget a.dealItem#last {margin-right:0} #fiveDealsWidget .dealItemTitle {display:block; margin:10px 5px; color:#000; font-weight:bold} #fiveDealsWidget .dealItemImage, #fiveDealsWidget .dealItemImage img {float:left; display:block; margin:0; padding:0} #fiveDealsWidget .dealItemImage {border:1px solid #ccc} #fiveDealsWidget .dealItemImage img {width:100%; height:auto} #fiveDealsWidget .dealItemdesc {float:left; display:block; color:#004db3; font-weight:bold; margin:5px;} #fiveDealsWidget .dealItemRate {float:left; display:block; color:#000; margin:5px} #fiveDealsWidget .dealFooter {display:block; float:left; width:100%; margin-top:5px; background-color:#e3e3e3 } #fiveDealsWidget .footerText {font-size:10px; margin:10px 10px 10px 10px;} @media (max-width: 635px) { #fiveDealsWidget a.dealItem {width:19%; margin-right:1%} #fiveDealsWidget a.dealItem#last {width:20%} } @media (max-width: 560px) { #fiveDealsWidget #desktop {display:none;} #fiveDealsWidget #mobile {display:block!important} #fiveDealsWidget a.dealItem {background-color: #fff; height:auto; min-height:auto} #fiveDealsWidget a.dealItem {border-bottom:1px solid #ececec; margin-bottom:5px; padding-bottom:10px} #fiveDealsWidget a.dealItem#last {border-bottom:0px solid #ececec; margin-bottom:5px; padding-bottom:0px} #fiveDealsWidget a.dealItem, #fiveDealsWidget a.dealItem#last {width:100%} #fiveDealsWidget .dealItemContent, #fiveDealsWidget .dealItemImage {float:left; display:inline-block} #fiveDealsWidget .dealItemImage {width:35%; margin-right:1%} #fiveDealsWidget .dealItemContent {width:63%} #fiveDealsWidget .dealItemTitle {margin: 0px 5px 5px; font-size:16px} #fiveDealsWidget .dealItemContent .dealItemdesc, #fiveDealsWidget .dealItemContent .dealItemRate {clear:both} }
