Topic: Spotlight on US stock Q2 2026 earnings. The company's refining indicator margin is expected to reach $42 per barrel, surpassing the record of $28.04 set after Russia's full-scale invasion of Ukraine in 2022. Trading divisions at energy companies often profit from sharp price swings, and Shell said it still expects its oil and gas trading team to deliver strong results.

Buffeted by market turbulence from the Middle East conflict and tight global fuel supplies, this London-based energy giant is expected to report a record quarterly refining margin for the third quarter.

Shell said on Wednesday that its benchmark refining margin for the third quarter is expected to be $42 per barrel, compared with $24 per barrel in the second quarter. The previous all-time high came after Russia's full-scale invasion of Ukraine in 2022, at $28.04 per barrel.

Refining margin measures the difference between the cost of buying crude oil and the value of the various refined products made from it. A high margin means demand for refined products exceeds refineries' production capacity.

Despite the sharp jump in margins this quarter, Shell's refinery utilization failed to maintain its second-quarter level. Low water levels on Germany's Rhine River weighed on refinery utilization, which fell from 102% in the previous quarter to 93%-97%; in the second quarter Shell ran its refining facilities at full capacity, boosting output of jet fuel and diesel.

Shell's earnings preview comes as the Middle East conflict continues to unsettle energy markets. War between the US and Israel against Iran broke out earlier this year, and oil prices remain elevated after large-scale hostilities ended. Any signal in the geopolitical situation — whether the conflict moves toward an end or reignites, or whether Iran's Houthi allies in Yemen expand their influence in the Red Sea's key shipping lanes — triggers sharp swings in oil prices.

Trading operations at energy companies typically benefit from sharp price fluctuations, and Shell said it remains bullish on the performance of its oil and gas trading division.

In recent months, the war's impact on the global energy system has been most pronounced in the refining industry, which processes crude oil into the fuels that keep the global economy running. While Middle Eastern crude can flow to global markets via pipelines, the refined product market remains extremely tight in terms of supply and demand.

Several large refining facilities producing jet fuel and diesel have been damaged and will take time to repair. Diesel prices in the US and UK have already hit record highs, and refining margins have reached unprecedented levels. The average US diesel price on Wednesday was $6.31 per gallon, compared with just $3.68 a year earlier.

Coupled with Ukrainian drone strikes on Russian refineries and China's export restrictions, the tight refined product market may persist into 2027.

High European natural gas prices have also been a tailwind for corporate earnings. Overall European gas storage inventories are low, and European countries are competing with Asian buyers for gas supply.

The conflict's impact on Shell's natural gas business segment has been mixed. Its flagship asset — the Qatar Pearl gas-to-liquids plant — was attacked and has yet to resume production. On the other hand, higher gas prices are a positive, as the trading division can resell North American LNG to European customers willing to pay more.

In addition, helped by business integration from its roughly $13.6 billion acquisition of Canada's ARC Resources in April, Shell raised its third-quarter integrated gas production guidance to an expected 740,000-780,000 barrels of oil equivalent per day.