US Refiners Face Quarterly Losses Despite Improved Margins Amid Tariffs and Trade War Uncertainty
The US refining industry is bracing for the ripple effect of President Donald Trump’s sweeping tariffs, with top refiners expected to report quarterly losses despite improved margins. Energy analysts predict that a combination of factors, including seasonal turnarounds, unplanned outages, and the ongoing trade war between the US and China will impact demand for refined products.
Fuelmakers have seen earnings tumble from record levels in 2022, when a recovery in demand following the COVID-19 pandemic and Russia’s invasion of Ukraine drove up refined product prices. However, margins increased in the first quarter of 2025 from last year’s multi-year lows, providing some respite for refiners.
Marathon Petroleum: First Refiner to Report Losses
Marathon Petroleum, the top US refiner by volume, is expected to report a per-share loss of 53 cents compared to $2.58 per share profit a year ago, according to LSEG estimates. The Findlay, Ohio-based refiner last reported negative earnings per share (EPS) in Q1 2021.
Marathon Petroleum’s ability to capture revenues was limited due to seasonal turnarounds and unplanned outages. However, higher gasoline and diesel futures cracks in the first quarter helped offset some losses. LSEG estimates suggest that Marathon Petroleum will report a loss of $2.85 per share compared to $1.92 profit a year ago.
Valero: Second-Largest US Refiner Faces Losses
Valero, the second-largest US refiner by capacity, is set to kick off refiner earnings on Thursday, with analysts forecasting a profit of 42 cents per share, down from $3.82 profit a year ago, according to data from LSEG. This represents a significant decline in profit margins for Valero.
Like Marathon Petroleum, Valero’s ability to capture revenues was impacted by seasonal turnarounds and unplanned outages. However, higher gasoline and diesel futures cracks helped offset some losses, contributing to the expected loss of $3.40 per share compared to $2.75 profit a year ago.
Phillips 66: Expected to Report Heavy Losses
Phillips 66 is expected to report a loss of 72 cents per share, versus $1.90 per share profit a year ago, according to LSEG estimates. The refining company’s ability to capture revenues was severely impacted by lower average capture rates and higher production costs.
Capture rates represent a refining company’s ability to profit from market conditions, with Phillips 66 experiencing a significant decline in this metric. The independent refiner faced various challenges during the quarter, including heavy seasonal maintenance, unplanned outages, and tighter crude differentials.
PBF Energy: Major Impacts Expected
Independent refiner PBF Energy took its 157,000 barrel-per-day (bpd) Martinez, California, refinery offline in February after a fire. The fire-damaged units will remain shut until the fourth quarter, contributing to significant losses for the company.
LSEG estimates suggest that PBF Energy will report a loss of $2.91 per share compared to $0.85 profit a year ago. This represents a sharp decline in earnings and highlights the potential financial impacts on refiners due to unplanned outages and maintenance interruptions.
Trade War and Demand Uncertainty
The ongoing trade tensions between the US and China, as well as the global economic outlook, remain major uncertainties for the refining industry. Investors are eager to understand the implications of these factors on demand for refined products.
TD Cowen analyst Jason Gabelman notes that investors want clarity about how the trade war may impact demand for gasoline, diesel, and jet fuel. The US Energy Information Administration estimates that global oil and fuel demand will grow by 900,000 bpd from last year’s numbers but will be a drop of 300,000 bpd from its previous expectation.
Tariffs and Refined Product Space
US President Donald Trump’s tariffs have indirectly affected the refining industry, although their impact is not as pronounced in the refined product space. Energy analysts predict that slower economic growth will eventually play out in refined products.
Ben Hoff, head of commodity strategy at Societe Generale, emphasizes that the indirect effect of slower economic growth will trickle down into higher production costs and tighter margins for refiners. The question remains when these losses start rippling forward and creeping into refineries’ bottom lines.
Conclusion
In conclusion, despite improved margins in the refining industry, US refiners are set to report significant losses due to various factors such as seasonal turnarounds, unplanned outages, trade war, and demand uncertainty. Marathon Petroleum is expected to report a per-share loss of 53 cents compared to $2.58 per share profit a year ago.
Valero will kick off refiner earnings on Thursday with analysts forecasting a profit of 42 cents per share. Phillips 66 is expected to report a loss of 72 cents per share compared to $1.90 per share profit last year. PBF Energy, affected by a fire that damaged its major Martinez refinery, is likely to experience heavy losses.
Investors are eager for clarity on the trade war and demand uncertainty impacting refineries’ profitability. As the US refining industry navigates the impact of tariffs and lower demand, analysts will closely follow the financial performances of top refiners.