Chevron does not report comparable standalone refining margin numbers, but Friday’s report said its downstream profits more than quadrupled from a year ago to $4.9 billion, with higher margins on sales of refined products.
It comes as refined fuel supplies tighten and refinery output is squeezed globally, even as oil companies reported this week that they were running capacity near capacity to meet demand.
Why is supply so tight?
In addition to higher refined product margins, higher crude oil prices are also supporting earnings for some integrated oil majors that operate both upstream oil and gas operations and downstream refining operations.
In the wake of Russia’s full-scale invasion of Ukraine, the company’s profits have rebounded to levels last seen during the 2022 energy crisis.
The surge in revenue comes at a time when consumers are facing higher energy prices.
Some analysts say political efforts to tackle prices, such as the release of emergency diesel stockpiles or agreements with the United States and Russia to increase diesel supplies to global markets, may have limited impact unless available supply increases significantly, demand weakens, or global tensions ease.
Rafael Portela, director of corporate strategy and analysis at energy consultancy Wood Mackenzie, told CNBC that while oil barrels are still “coming out of the Gulf” during the war, “there’s a significant freight premium” while “very little of the diesel or jet fuel that would have gone into those barrels is coming out.”
“Russian refinery shutdowns and export bans have spilled the second slug from the global pool,” he added.
Listing what needs to happen for the crisis to end, he said: “Product supplies are recovering, based on expanded availability of crude oil to the global refining sector. Gulf refineries are reopening and exports from Russia are returning.”
“The Hormuz settlement will immediately hit margins on the sentiment side, but with inventories so depleted, the physical strain will continue into 2027.”
