On Thursday, London-listed shares in Shell PLC (LON: SHEL) dropped in mid-morning trading after the company warned that lower refining margins would hit third-quarter earnings. Europe’s largest oil firm said its indicative refining margin is expected to come in at USD 15 per barrel during the period, down from USD 28 per barrel in the second quarter.

The energy giant said that the decrease in margin is expected to have a negative impact of between USD 1.0B and USD 1.4B on the third quarter Adjusted Ebitda (earnings before interest, tax, depreciation and amortization) for Products compared to the second quarter 2022.

The company also asserted that the group’s indicative chemicals margin dipped to USD 27 a ton versus USD 86 a ton in the prior three-month timeframe. The downturn will likely negatively impact quarterly core earnings at Shell’s chemical unit by between USD 300M and USD 600M.

The announcement comes after increasing prices for liquefied natural gas (LNG) and crude oil earlier this year after the outbreak of the war in Ukraine helped Shell post record income.

Founded in 1907, Shell plc is a British multinational oil and gas company. It is one of the oil and gas ‘supermajors’, headquartered in London. By revenue and profits, it is one of the largest companies in the world.