Chevron reported a dramatic surge in its downstream earnings, which more than quadrupled from a year earlier to $4.9 billion. The company attributed this increase to higher margins on refined-product sales, despite global refinery output operating near capacity to meet demand. The tight supplies of refined fuels have contributed to soaring margins, even as crude oil prices have also supported earnings for integrated oil majors.
The current earnings spikes contrast sharply with consumers facing higher energy prices. Analysts suggest that political efforts to address these prices, such as releasing emergency diesel stockpiles and a U.S. deal with Russia to supply more diesel, may have limited impact unless they significantly increase supply or demand weakens.
Raphael Portela, director for corporate strategy and analytics at Wood Mackenzie, noted that crude oil barrels are still leaving the Gulf amid the war but at a steep freight premium. He highlighted that Russia's refinery outages and export ban have further reduced global supply. Portela outlined the conditions needed to end the supply crunch, including greater crude availability to the global refining sector and the return of Russian exports.
Portela also mentioned that a settlement in the Hormuz region could quickly impact margins on sentiment, but the physical tightness in supply is expected to persist well into 2027 due to depleted inventories.