Shell Takes $5.4bn Hit as Tanker Rates Hit Oil Majors' Books

Shell booked a $5.4bn non-cash increase in shipping lease liabilities in the third quarter, the clearest accounting sign yet that runaway tanker rates since the Middle East conflict erupted are now landing directly on oil majors' balance sheets.

The adjustment covers index-linked vessel charters, which accounting rules force companies to revalue at prevailing spot rates. Since the start of the year, Shell's shipping lease liabilities have risen by nearly $7.7bn. The company stressed the revaluations do not represent immediate cash going out the door — but they quantify, in a single line, how far the freight market has moved against charterers.

Shell chief financial officer Sinead Gorman told analysts that freight rates between the Middle East and China now run around ten times their levels a year ago. "You see that starting to come into margins," she said, noting that higher transportation costs were hitting refining, chemicals and crude trading alike.

The British major still posted adjusted third-quarter earnings of $10.8bn, more than double the year-earlier figure, carried by exceptionally strong refining margins. Shell's problem is not the bottom line today; it is what persistent freight inflation does to each barrel it moves tomorrow.

How much does freight now cost per barrel?

TotalEnergies put a hard number on it. Chief executive Patrick Pouyanné said shipping costs, previously around $2 to $3 per barrel, have climbed to approximately $25 per barrel. He attributed roughly $6 per barrel of pressure on the company's liquids price realisations to additional freight costs alone.

The French major holds partial protection through its chartering strategy: fixed-rate medium- and long-term agreements cover about 40% of the equity crude it lifts. That cover also had a commercial payoff. Pouyanné said having tankers available at agreed rates let the company's traders profit from moving Iraqi crude through the Strait of Hormuz while spot charterers paid through the nose.

Eni told a similar story on the refining side. The Italian group reported third-quarter refining adjusted operating profit of €730m, supported by strong margins and higher refinery utilisation, but said the gains were partly offset by higher freight costs and unfavourable crude differentials. Eni executive Pino Ricci confirmed that the company's refining margin calculations now incorporate the sharp increase in transportation costs resulting from the Hormuz crisis.

Where did the trading losses land?

Equinor showed the most direct hit. Its crude, products and liquids business swung to an adjusted operating loss of $96m in the third quarter, from a $355m profit in the previous three months — a swing of more than $450m in one quarter. The Norwegian major blamed losses on derivative positions in the exceptionally tight shipping market, which more than offset strong products trading. Equinor also flagged increased freight rates as an important contributor to higher operating expenses across the first nine months of 2026.

Will tanker owners call the top?

Majors hoping for a freight reprieve found little comfort at this week's Maritime CEO Forum in Monaco, where tanker owners showed no hurry to declare the market peaked.

Arrow researcher Burak Cetinok calculated that VLCC earnings this month were 14 times their ten-year average, with the weekly multiple approaching 20 — and still saw no immediate sell signal. DHT Holdings chief executive Svein Moxnes Harfjeld argued fleet ageing will underpin the market: by the end of 2029, almost half the VLCC fleet will be over 15 years old and a quarter over 20, creating substantial replacement requirements.

Alberta Shipmanagement's Alexia Inglessis pointed to recovering Middle Eastern oil flows, stronger Chinese demand, depleted inventories and sanctions-related inefficiencies. "I think we have a lot of things that point to a good market for the short to medium term," she said.

For shippers of crude, that combination — liabilities already booked at Shell, per-barrel freight near $25 at TotalEnergies and owners signalling no retreat — suggests elevated tanker costs will stay embedded in oil majors' margins well into next year.