Oil and gas giants Shell and TotalEnergies have reported their strongest quarterly earnings since 2022, benefiting from soaring refining margins, volatile energy markets and disruptions to
global supplies caused by the ongoing war involving the United States, Israel and Iran. Both companies have also increased or reaffirmed plans to return billions of dollars to shareholders through share buybacks.
Shell announced that it would raise its quarterly share repurchase programme to $5 billion, up from $3 billion previously. The move represents one of the company's largest buyback programmes on record. Meanwhile, France's TotalEnergies confirmed that it intended to repurchase $2.5 billion of its shares in the final quarter of 2026, followed by another $2.5 billion in the first quarter of 2027.
The announcements highlight how major energy producers are distributing the additional profits generated by geopolitical instability and the resulting disruption to oil and gas supplies.
Investors responded positively to the results. Shell shares climbed 3.1% in early trading on Thursday, while TotalEnergies gained 0.6%. The wider European energy sector rose by 1.2%.
Refining boom lifts earnings above expectations
Both companies benefited from an extraordinary improvement in refining profitability. Margins at Shell and TotalEnergies almost quadrupled compared with the same period a year earlier, reflecting tight fuel markets and unusually strong demand for refined petroleum products.
Shell reported third-quarter net income of $10.81 billion, nearly twice the $5.43 billion recorded a year earlier. The result also exceeded the average analyst forecast of $10.33 billion.
TotalEnergies delivered adjusted net income of $9.1 billion for the July-to-September period, more than double its $4 billion profit in the corresponding quarter of 2025. Analysts had expected earnings of approximately $8.3 billion.
Refining margins reached $42 per barrel at Shell and $33.20 per barrel at TotalEnergies, helping both companies achieve their highest quarterly earnings since 2022.
TotalEnergies' refining and chemicals division was a particularly strong performer, generating a record $3.6 billion in net income. That was more than five times its earnings a year earlier and twice the level reported in the previous quarter.
Chief Executive Patrick Pouyanné attributed the performance to a near-10% increase in refining throughput, combined with profitable oil trading. These activities enabled the company to take advantage of exceptionally high refining margins in Europe and other international markets.
The company's liquefied natural gas (LNG) business also benefited from favourable market conditions. Earnings from the division reached $1.9 billion as average gas prices increased by 20% compared with the previous quarter and trading activity remained strong.
Shell strengthens shareholder payouts
Shell's results were supported by improvements across its main business divisions, with operating cash flow providing particular evidence of its financial strength.
Cash flow from operations, excluding changes in working capital, increased to $21.7 billion from $12.24 billion a year earlier. The figure also comfortably exceeded analysts' expectations of $18.18 billion.
The enlarged buyback programme reinforces Shell's strategy of returning substantial amounts of cash to investors while maintaining investment in its energy operations.
According to company data, Shell has delivered a total shareholder return of 120% since December 30, 2022, including reinvested dividends. This outperformed several major international competitors over the same period: BP recorded 78%, TotalEnergies 84%, ExxonMobil 89% and Chevron 51%.
However, analysts have raised questions about whether Shell will meet its annual shareholder distribution targets. RBC analyst Biraj Borkhataria suggested that the company could fall short of its guidance to distribute between 40% and 50% of cash flow to shareholders, even with the planned $5 billion buyback. He attributed the potential shortfall to unusual macroeconomic conditions.
Middle East conflict disrupts Shell's production
Despite its strong financial performance, Shell continues to face operational challenges arising from the conflict in the Middle East.
The company's oil and gas production during the first nine months of 2026 fell by 17% compared with the same period last year. The decline was driven largely by reduced output from Qatar following disruptions linked to the regional conflict.
Shell's LNG liquefaction volumes, by contrast, increased by 12%, supported by the gradual expansion of operations at LNG Canada. That growth partly offset the impact of lower Qatari production.
In March, Shell suspended operations at its Pearl gas-to-liquids facility in Qatar after an attack on Ras Laffan Industrial City damaged one of the plant's two processing trains. Production has since resumed at a reduced level, but the company estimates that repairs could take approximately a year.
The conflict has therefore created a mixed picture for the energy major: higher market prices and refining margins have boosted profits, while physical damage and disrupted production have affected parts of its upstream and gas businesses.
Shell also reported $5.4 billion in non-cash increases associated with shipping leases, which contribute to its reported net debt.
In addition, the company recorded approximately $2 billion in impairments across its European biogas operations. The write-down reflects weaker growth expectations for the market and affects assets that include those acquired through Shell's $2 billion purchase of Denmark-based Nature Energy in 2023.
Capital spending plans adjusted
Alongside the earnings announcement, Shell reduced its capital expenditure forecast for 2026. The company now expects investment of between $23 billion and $25 billion, compared with its previous guidance of $24 billion to $26 billion.
The revised outlook suggests that Shell is adjusting its spending plans while maintaining its commitment to shareholder returns.
For both Shell and TotalEnergies, the latest results demonstrate how geopolitical turmoil can reshape profitability across the energy sector. Disrupted supplies and elevated refining margins have created opportunities for companies able to benefit from changing market conditions, even as damage to infrastructure and reduced production introduce new risks.
Their expanded or reaffirmed buyback programmes indicate that both groups expect to return substantial sums to investors. The longer-term outlook, however, will depend on how energy prices evolve, whether Middle Eastern production recovers and how quickly refining margins return to more typical levels. Photo by WhisperToMe, Wikimedia commons.
