Refiners Defy Oil Price Slump With Strong Q1 Profits on Solid Margins
Despite slumping oil prices, global refiners are turning in strong first-quarter earnings, thanks to a sharp rebound in profit margins, Reuters reports, with U.S. Gulf Coast refiners processing Mars crude enjoying a doubling of margins to some $16 per barrel, $7 margins in Singapore for Dubai crude, and a 36% margin jump in Asia for Arab Light crude.
All in all, we’re looking at refining margins for the first-quarter of this year that are better than 2024, even as upstream margins weaken and the industry at large expresses concern over a cooling global oil demand outlook.
For now, we are witnessing cheap crude and stable demand for gasoline, diesel and jet fuel, which is, in turn, allowing refiners to profit from the widening crack spreads. In other words, refiners are minting money on the crack spread.
So far for the quarter, we’ve seen a mixed bag, despite the overall boost for refiners.
Marathon Petroleum posted a Q1 loss, citing weaker-than-expected margins, seasonal maintenance, and unplanned downtime as key drags on performance. Conversely, Chevron’s refining unit outperformed, helping the company meet analysts’ expectations despite a soft crude price deck.
Other major U.S. refiners posted similarly mixed results. Valero Energy reported a sharp year-over-year profit drop to $282 million as heavy maintenance activity and softer renewable diesel margins weighed on results. Phillips 66 also saw weaker refining margins, particularly in the Gulf Coast and Atlantic Basin, though its $796 million in Q1 net income was buoyed by solid midstream and chemical performance. Delek US posted a deeper-than-expected net loss of $173 million, citing market softness and operational headwinds.
The path forward, however, isn’t likely going to be a smoothly paved one, with OPEC+ considering supply increases, and with the International Energy Agency (IEA) lowering its 2025 demand forecast, as China’s economic sluggishness casts another long shadow over refined product consumption.
For now, though, the message from Q1 earnings is clear: the refining business is proving more resilient than expected. Investors betting on pure-play refiners may have more runway—at least while margins stay fat and crude remains cheap.
