TotalEnergies Expects Windfall as Conflict Squeezes Fuel Supplies — Update

By Adam Whittaker

TotalEnergies said it expects to report exceptional results from its downstream business after third-quarter refining margins jumped, lifted by global conflict and export restrictions that removed millions of barrels of refined products from the market and left customers scrambling for alternate supplies.

The windfall isn't isolated to its refining and chemicals division--a jump in gas prices, strong oil and gas trading, and elevated oil prices have all combined to set TotalEnergies up for a bumper third quarter.

The conflict in the Middle East between the U.S., its allies, and Iran has upended energy markets. In the third quarter, its impact was most pronounced on refineries, where crude oil is turned into the products that power the global economy.

Attacks on several large refineries in the Middle East squeezed global diesel and jet fuel supplies. Ukrainian attacks on Russian refineries and Chinese export restrictions added to the problem, and left the world about 1.6 million barrels of diesel a day short, the International Energy Agency said last month.

TotalEnergies said Thursday that its European refining margin marker is forecast to rise to $33.2 a barrel from $13.5 in the prior quarter compared with the $8.4 it reported in the same period a year prior. The margin measures the difference between the cost of crude entering a refinery and the value of the fuels produced from it. It isn't, however, a reflection of the profit the refiner makes because it doesn't take into account costs associated with refining, like energy costs or workers' salaries.

Refineries in Europe have become increasingly unprofitable. High costs mean they struggle to compete with Chinese or Middle Eastern peers and many have closed in recent years. TotalEnergies has said for six of the eight years since 2018 its refining operations in France have lost money. Only 2022 and 2023 were profitable following Russia's invasion of Ukraine, which also upended energy markets.

Around the world, refineries have been running as hard as possible to capture the exceptional margins. TotalEnergies' refining output increased 10% over the quarter, the company said.

TotalEnergies said earnings in its liquefied natural gas business are expected to rise sharply on the prior quarter, driven by a 20% jump in average LNG prices and strong gas trading. Attacks on LNG plants in the Middle East have removed significant supply from the global market and left European and Japanese customers bidding against each other for cargoes. Below-average gas storage levels in Europe mean demand for gas is set to remain strong over the coming months.

Currently, around 5% of TotalEnergies' total oil and gas output has been affected by the Middle East conflict, less than in the prior quarter. It said it expects to see an on-quarter rise in hydrocarbon output to 2.45 million to 2.50 million barrels of oil equivalent a day, from 2.395 million in the second quarter.

Results in its integrated power division will reflect the contribution from its electricity production joint venture with Energeticky a Prumyslovy Holding, it said.

Write to Adam Whittaker at adam.whittaker@wsj.com

(END) Dow Jones Newswires

October 15, 2026 04:00 ET (08:00 GMT)