Merchants,
this week the 3 largest oil companies in Europe reported the best quarter any of them has had in years.
Shell made $10.8 billion, double a year ago and its best since 2022.
TotalEnergies made $9.1 billion, up from $4 billion.
BP made $8.5 billion, almost 4 times last year’s $2.2 billion and its highest since 2008.
Together that is $28 billion in 3 months, against $11.6 billion in the same quarter of 2025.
Brent averaged $97 a barrel in the quarter, $7 less than in the one before.
The money came from the part of these companies that investors spent a decade asking them to shrink: the refineries.
The margin for turning a barrel of crude into diesel and jet fuel went from about $10 before the war to $42 at Shell, $33 at TotalEnergies and $46.70 at BP.
The refining divisions of the 3 earned about $13 billion in the quarter, a year ago they earned under $2 billion.
The reason is simple enough to put in one paragraph.
A refinery buys crude and sells fuel. Its profit is the gap between the two and this year the gap did something it had never done before, because two wars took fuel making capacity off the market at the same time.
The Iran war shut refineries in the Gulf and forced the region’s diesel onto long, expensive routes. Ukraine’s drones hit Russian refineries all year and Russia banned diesel exports (now shipping to US). The world had fewer places making diesel and the same number of trucks, ships and planes burning it.
Whoever still had a working refinery could charge what the market would bear and $78 a barrel for the diesel margin in Europe this week against about $15 two years ago.
Europe is where the bill lands and the European Commission said so on Tuesday. After meeting the region’s refiners, the energy commissioner Dan Jørgensen called the crisis a «wake up call» and gave the numbers: about a quarter of the EU’s refineries have closed in the past 20 years, taking about 1/10 of its capacity.
Repsol, reporting on Wednesday, counted 35 European closures since 2009 and 1/5 of the capacity gone.
Shell closed Wesseling last year, Petroineos closed Grangemouth, BP sold Gelsenkirchen in July.
None of the 10 largest refineries in the world is in Europe, 7 are in Asia and the Gulf, 1 in the United States, 1 in Venezuela and 1 in Nigeria, and the largest, Jamnagar in India, alone processes more than 3 of Europe’s biggest plants together.
That matters in a year when the exporters have used their position.
China paused fuel exports for October.
Russia’s ban runs to the end of the year, with a quota carved out for the United States.
Washington itself considered a diesel export ban before the G7 agreed to release up to 100 million barrels of oil and diesel from emergency stocks.
Europe spent a decade closing refineries and importing the difference, from Jamnagar in India and the US Gulf among others, and in a diesel shortage an importer takes the price it is given.
The companies that still refine in Europe, and three of the biggest are Europe’s own majors, collect it.
The chart above is the free half of this edition in one picture.
Refining margins at the 3 majors were between $1 and $15 a barrel for most of the past five years, spiked once when Russia cut the pipes in 2022 and have now gone past that peak.
Last week I argued that the companies holding the hard assets of the oil chain are collecting record cash that the market has not fully priced.
This quarter is the cash.
The profit is public.
What the 3 did with it is the part that decides what you earn and they did 3 different things: one paid its owners a quarter of the cash it generated, one paid them 9%, and one has a payout promise it has not yet kept.
One of the 3 has 39% of its quarter riding on a margin the futures curve already prices 1/3 lower.
Only one of the 3 would I own today and the paid half says which, why, and what I am watching to change my mind.