Years of shrinkage in production capacity and geopolitical conflicts have caused a global fuel supply emergency! US refiners are enjoying multi-billion dollar profits

The Zhitong Finance App learned that against the backdrop of the closure of refineries in the US over the years and the tightening of global fuel supply due to the Middle East war, US refiners are fully operating to meet market demand, making the second quarter one of the most profitable quarters in history.

Valero Energy (VLO.US)'s earnings report released on Thursday showed that in terms of earnings per share, the company achieved the strongest quarterly performance in history. PBF Energy (PBF.US) and HF Sinclair (DINO.US) recorded the best profit performance since 2022 and 2023, respectively. Other refining giants, including Phillips 66 (PSX.US) and Marathon Crude Oil (MPC.US), will also release financial reports, and investors also expect these companies to deliver impressive results.

Refinery shutdowns over the years have led to a lack of supply buffers in the fuel market. Today, the war between the US and Iran has disrupted fuel exports to the Middle East, while Ukraine's attack on Russian refineries has also limited gasoline and diesel exports. Together, these supply disruptions have led to a decline in global fuel stocks and a rise in global fuel prices.

While demand remains relatively stable, gasoline and diesel inventories show little sign of recovery, which means that market supply will remain tight and prices will remain high. Although fuel production usually starts to slow in the fall, US refiners say they will continue to chase near historic profit margins.

Matthew C Lucy, CEO of PBF Energy, said in the earnings call: “Product inventory recovery will be slow, and the inventory replenishment process that must eventually be carried out will provide favorable support for refining profit margins in the next few quarters.”

US refiners make billions of dollars in profits under the impact of war

Valero Energy's net profit for the second quarter increased more than fivefold year-on-year, from US$714 million in the same period last year to US$3.7 billion, a record high. HF Sinclair's net profit for the second quarter increased approximately fourfold to US$892 million. PBF Energy, on the other hand, changed from loss to profit in the same period in 2025, and net profit increased by more than 1 billion US dollars.

Looking ahead to the next quarter, both Valero Energy and HF Sinclair expect their average daily crude oil production to drop only slightly. PBF Energy, which processed nearly 890,000 barrels of crude oil per day in the second quarter, expects the processing volume to increase further in the next quarter, reaching a maximum of 960,000 barrels per day.

Corporate profits are likely to improve further as fuel supplies continue to be tight. Valero Energy's chief operating officer Gary Simmons said in a conference call with stock analysts: “The profit margin environment has been stronger so far than in the second quarter.” He pointed out that lower crude oil costs are driving improved profits.

Simmons also said that there is currently little indication that fuel prices will fall in the short term. He pointed out that aviation fuel prices, which fell somewhat from their historical high this summer, seem to be rising again.

Diesel prices remained high as Russian supply disruptions increased US export demand. Diesel prices are likely to continue to be supported even if the cost is higher as buyers begin to restock inventory ahead of time for the winter heating season.

At the same time, Simmons said that importing gasoline from Europe to the US is economically uneconomical because gasoline prices in the European market are also high. However, exporting gasoline to Latin America is economically attractive because of arbitrage opportunities between markets. He added that this has also led to the continued high level of gasoline prices in the US.