Western oil majors reported stronger third-quarter downstream results as Ukrainian strikes on Russian energy infrastructure and tighter Western sanctions lifted global refining margins and reshaped product flows.
Russia’s seaborne refined-product exports in September fell sharply from 2025 highs, supporting margins and Big Oil profits, according to industry data and company disclosures.
Drone attacks since July have intermittently disrupted operations at Russian refineries and export terminals, curbing diesel and fuel-oil availability. Analysts estimate Russia’s product exports in late summer and early autumn dropped to multi-year lows, a shift echoed in recent market reports tracking refinery outages and export patterns.
Integrated oil companies with large downstream systems have been immediate beneficiaries. Shell, ExxonMobil, Chevron and TotalEnergies together operate around a tenth of global refining capacity and collectively reported materially higher quarter-on-quarter refining profits in Q3, as crack spreads widened. Company filings and guidance attribute the improvement mainly to stronger industry margins tied to supply disruptions.
ExxonMobil said earnings in its energy products segment rose on the quarter, citing stronger refining margins amid supply constraints and record refinery throughput. The group’s third-quarter update noted the uplift versus Q2 came primarily from margins linked to disruption-driven tightness.
Shell flagged a quarter-on-quarter increase of roughly $700 million in adjusted earnings within its chemicals and products businesses, driven by higher refining and trading margins. The company’s detailed quarterly results and market update highlight the contribution of products margins to overall performance.
BP, due to report this week, has also indicated firmer downstream economics. Its refining indicator margin averaged $15.8 per barrel in Q3, up from $11.9 in Q2, with the metric so far averaging above $15 in early Q4, pointing to continued support from product-market tightness.
Policy measures in Europe are set to keep margins elevated into 2026. The European Union has approved plans to bar imports of fuels refined from Russian crude from 1 January 2026, closing a loophole that had allowed third-country refiners to process discounted Russian feedstock and sell products into Europe. The tightening is designed to reduce Moscow’s oil income and align trade with earlier sanctions packages.
In the United States, sanctions announced on 22 October against Rosneft and Lukoil added a further layer of risk for buyers. The designations target Russia’s two largest oil companies and a wide array of subsidiaries, with compliance implications for counterparties worldwide. Market commentary and official notices noted that the measures supported prices and margins as buyers reassessed exposure.
Russian companies have already begun to respond. Lukoil has said it plans to divest certain international assets under a wind-down licence following the new sanctions, underscoring the broader operational impact on Russian producers’ global footprints.
Even so, a repeat of the extreme crude price rally of 2022 appears unlikely. The global system is better supplied and has adapted to sanctions via longer trade routes and alternative logistics, including a sizeable “shadow fleet” moving sanctioned barrels outside mainstream insurance and finance channels, albeit under increasing scrutiny. Recent analyses suggest the shadow fleet remains large—though growth has slowed in 2025 as authorities tighten enforcement.
The near-term outlook for the majors therefore combines softer upstream realisations with firmer downstream economics. Elevated product cracks, active arbitrage, and episodic dislocations—whether from further infrastructure damage, shipping incidents or enforcement actions—support refining and trading conditions that tend to favour large integrated firms with diversified supply chains. Indicators to watch include diesel cracks in Europe and North America, refinery utilisation in the Atlantic Basin, the pace of Russian refinery repairs and the re-routing of product flows via India, the Middle East and Turkey.
