TotalEnergies flags quarterly profit surge as Iran war continues to drive energy prices

By Dimitri Rhodes

Oct 15 (Reuters) - TotalEnergies said on Thursday it expects third-quarter profits to be driven by a near quadrupling in refining margins from a year ago and a sharp rise in liquefied natural gas income.

The US-Israeli war with Iran, which led to the effective closure of the Strait of Hormuz, has pushed crude oil and gas prices to multi-year highs as the market prepares for strong winter demand, delivering a windfall for major energy companies like TotalEnergies.

TotalEnergies expects to report a refining margin of $33.2 per barrel for the July-September quarter, up from $13.5 a barrel in the previous three months and almost four times the $8.4 per barrel it had posted a year ago, the company said in a trading update.

TotalEnergies shares were up 0.7% at €80.7 by 0725 GMT, outperforming a 1.3% decrease in the broader European energy market. TotalEnergies is up about 45.2% year-to-date.

Rival Shell said last week it expected a record-high third-quarter refining margin, while BP said on Tuesday its refining margin was set to triple from last year.

TotalEnergies said hydrocarbon production was expected to have reached a maximum of 2.5 million barrels of oil equivalent per day in the third quarter.

It now estimates the impact of the Iran war on its upstream output at 5% of that figure, or around 125,000 barrels of oil equivalent per day, down from the 210,000 boed reported over the second quarter.

MIDDLE EAST IMPACT DRIVES DOWNSTREAM PROFITS

TotalEnergies expects downstream results to reach "exceptional levels" as cash flow from refining and chemicals is expected to double to around $4 billion in the third quarter compared to the previous one. The company also expects a 10% increase in refining throughput over the same period.

Trading activities in both oil and gas are also expected to drive earnings, as average LNG prices rose 20% over the last quarter, recovering from a previously bearish European market now preparing for strong winter demand, the company said.

Brent crude futures settled at around $91.3 per barrel in the third quarter, while European benchmark gas prices jumped almost 40% from the previous quarter as the Hormuz crisis trapped LNG supply from Qatar and the UAE, which supply nearly 20% of the world market.

Major oil companies are expected to reap a multibillion-dollar windfall from the Middle East conflict as higher energy prices boost their revenue.

TotalEnergies and Shell will report detailed third-quarter results on October 29, with BP to follow a day later.

(Reporting by Dimitri Rhodes in Gdansk, editing by Milla Nissi-Prussak and Xevi Fontdegloria)