Shell has turned the screw on rival BP by posting a record quarterly profit of £40 million a day on the back of sky-high crude oil prices and refining margins.

Results today showed the Anglo-Dutch giant made $7.56 billion (£3.7 billion) in the three months to June 30, up 20 per cent on last year and nearly $500 million ahead of its previous best.

BP posted second quarter profits of $6.09 billion on Tuesday and Tony Hayward, its new chief executive, admitted the group had not been performing well enough.

Jeroen van der Veer, Shell's chief executive, hailed his group’s performance as “competitive”.

Later US giant Exxon Mobil surprised the industry by posting a one per cent fall in profits - albeit to $10.3 billion - on weaker US gas prices.

While BP’s US refineries have been hit by outages and operational issues, Shell has been able to cash in on a surge in margins amid fears of a shortage of gasoline supplies.

World oil prices averaged nearly $69 a barrel in the second quarter — $10 a barrel more than a year ago — and petrol prices in the UK have nudged back towards £1 a litre.

Shell's performance was flattered by $660 million of one-off gains, but stripping this out the profits were still ahead of City expectations of £6.7 billion.

Production slipped 1 per cent to 3.18 million barrels of oil and gas day but Mr van der Veer insisted the group’s major projects were “going well” despite admitting that output for the year as a whole would come in at the lower end of forecasts.

Shell’s output has been hit by ongoing security problems in Nigeria’s Delta region, where local militia have attacked facilities and kidnapped contractors.

The group today said it could still not give a firm date for when it would be able to ramp back up to full production in the region but revealed it had found another "material" onshore oil discovery in the eastern part of the Delta.

It is targeting annual production across its portfolio of 3.3 million to 3.5 million barrels a day this year.

Shell ‘B’ shares rose just 8p to £20.20 in early trading with analysts blaming disappointment over the slump in production and a weaker than expected performance from the group’s gas and power arm.

James H Neale of Citigroup said: “We see these results as largely priced in.”

Cash flow in the second quarter was $8.8 billion, $1 billion up on last year. Shell’s performance meant its profits for the first-half of the year came in at $14.5 billion, up 17 per cent and another record.

Mr van der Veer said: “We have delivered another set of competitive results, driven by operating performance.

“I am pleased with our progress in downstream and on exploration. We are rejuvenating our portfolio, with sustained investment in new legacy assets, as well as disposals, both upstream and downstream.”

The results come a day after a group of leading US pension funds urged Shell and seven other international energy companies to cut their ties with Iran.

Shell and Spain’s Repsol have signed a preliminary agreement for the £5 billion development of a liquefied natural gas plant near to Iran’s huge South Pars gas field.

Mr van der Veer today reiterated that Shell would take political considerations into account when making a final investment decision. He added that any delays were due to economic and not political concerns.

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive