Shell, the oil and gas giant, has signalled its run of record profits is cooling as it makes less money from refining oil and producing chemicals.
The FTSE 100 company’s shares slid as it warned of a near halving of margins at its refineries and negative margins at its chemicals plants.
Oil giants have seen surging profits in the last year after Russia's invasion of Ukraine sent prices up and boosted refining demand as Russian refineries went offline. Several refineries have closed around the world in recent years following a slump in margins two years ago.
In May, North Sea oil and gas drillers were hit with a windfall tax by the UK government, taking their tax rate from 40pc to 65pc potentially up to 2025, to help fund help for households facing soaring energy bills.
Liz Truss, the prime minister, has said she is opposed to further windfall taxes, but is under pressure to do so after announcing energy bill help for households and businesses expected to cost £60bn over the next six months.
Shell's third quarter results from its natural gas trading division are also expected to be weaker than the previous quarter due to volatile markets.
However, Shell is still expected to report profits of $10.5bn (£9bn) in the third quarter, according to analysts' forecasts.
That compares with profits of $11.5bn in the second quarter, amid climbing oil and gas prices in the wake of Russia’s invasion of Ukraine.
Speaking this week in London, Shell’s boss Ben van Beurden signalled support for windfall taxes, while arguing against any cap on gas prices as is being discussed in Europe.
He said: “One way or another there needs to be government intervention.
“Protecting the poorest, that probably may then mean that governments need to tax people in this room to pay for it.”
In a trading update on Thursday ahead of its third quarter results on October 27, Shell said indicative refining margins dropped to $15 a barrel compared with $28 a barrel in the previous three months.
However, that was still double the level recorded a year ago.
Meanwhile, indicative chemicals margins dropped to negative $27 per tonne versus a positive $86 in the second quarter after demand for plastics slumped.
Shell said the combined hit to adjusted third-quarter profit could be as large as $2bn.
Biraj Borkhataria, an analyst at RBC, branded the update “disappointing” and said Shell may be forced to downgrade its full-year forecasts.
The lacklustre results also dragged down shares in energy rivals including SSE and British Gas owner Centrica.
It came as Cederic Cremers, executive vice president for liquefied natural gas at Shell, warned Russian gas supplies to Europe may be halted even after the Ukraine war ends.
Speaking at an energy conference in London, he said: “Probably we have to assume that it will not be back.”
He added that Europe’s energy crisis could be even more severe next winter than in the coming months.
“We should not forget that there was still a lot of Russian gas flowing into the European market across 2022, which is possibly not going to be there at all.”