Global Oil Refiners Unexpectedly See Profits Amid Factory Closures.

Oil refiners worldwide are unexpectedly growing wealthier by producing key types of fuel in recent weeks. This allows the industry to experience some relief before an anticipated softening in the coming year due to factory closures, which have led to decreased fuel supplies necessary to meet peak summer demand.

This development contrasts sharply with crude oil prices, which fell to a four-year low in May. Despite OPEC+ earlier lifting oil production restrictions, fuel demand remains resilient, positively impacting refiners' profits.

'Margins are strong because the balance of products – supply and demand – is still tight,' highlighted Sparta Commodities analyst Neil Crosby. Refining margins are the profits that a refiner earns from converting crude oil into fuel, such as gasoline or diesel.

Expected Decline in Refining Profits

Just a few months ago, leaders in the oil sector warned that 2025 is set to be challenging for processing. TotalEnergies and BP have already reported profit declines in the first quarter due to lower fuel revenues.

Despite some relief in the fuel market, refiners continue to grapple with dwindling demand due to economic downturns, intensifying competition, and rising electric vehicle usage.

• Global combined refining margins reached $8.37 per barrel in May 2025, the highest level since March 2024. However, this is significantly lower than the average of $33.50 in June 2022, when demand began to recover after the pandemic and the conflict in Ukraine.
• The shutdown of refineries in the U.S. and Europe has slowed the growth of net global refining capacity compared to demand growth, resulting in improved financial performance for existing plants.
• Global diesel fuel supplies could decline by 100,000 barrels per day in 2025, while demand may drop by 40,000 barrels per day, according to analysts at the energy consulting firm FGE.

After OPEC+ cuts oil production and weak demand, refiners are presented with an unexpected opportunity to profit in the fuel market, impressing competitors with resilient earnings. Nonetheless, the sector may gradually become less profitable due to declining fuel demand driven by various economic and competitive factors affecting the industry.