Why does Phillips 66 expect fuel margins to remain strong through 2027?

Phillips 66 expects fuel margins to remain strong through 2027 due to persistently tight refining fundamentals, including a global shortfall of 7 million barrels per day of refined products from the Middle East and Asia, plus another 1.4 million barrels per day from Russia; ongoing supply disruptions from the Iran–US–Israel conflict and Ukrainian attacks on Russian refineries; drawdowns and subsequent need to refill strategic petroleum reserves; delays in refinery maintenance to capture high profits—leading to future unplanned outages and scheduled heavy maintenance in 2027–2028; and structural constraints such as insufficient new refinery capacity to meet demand growth, even if the Strait of Hormuz reopens.

What evidence does the article provide that refiner profitability is at record levels?

The article cites Phillips 66’s record adjusted earnings-per-share of $9.14 in Q2 2024—the highest since its 2012 IPO—and notes that the 3-2-1 crack spread, a key metric of refiner profitability, hit an all-time high in July and stood at around $57 per barrel as of the earnings call, near its historical peak.

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Phillips 66 Expects Soaring Fuel Margins to Last Into 2027

Phillips 66 Expects Soaring Fuel Margins to Last Into 2027

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