Phillips 66 posts record quarterly profit on refining margins
Strong fuel margins and supply disruptions linked to the wars in Iran and Ukraine lift Phillips 66 to a record third-quarter profit. The Houston, Texas-based refiner beats Wall Street estimates as U.S. fuel exports, especially diesel, reach record levels and industry utilization stays near multi-year highs.
Highlights
- Phillips 66 reports record net income of $5.62 billion for the third quarter, up from $133 million a year earlier, driven by strong refining margins.
- Adjusted profit reaches $14.08 per share, beating analysts' estimate of $11.73, while the refining segment posts $6.06 billion in adjusted earnings and $38 per barrel realized margin.
- Quarterly U.S. refinery margins increase over 150% year-on-year amid tight global fuel supplies, with peers Valero Energy and HF Sinclair also posting record profits.
Quarterly earnings surge on stronger refining
As reported by Reuters, Phillips 66 reports record net income of $5.62 billion for the third quarter, up from $133 million a year earlier, as refining conditions remain exceptionally strong.The company says adjusted profit reaches $14.08 per share for the three months ended September 30, above analysts' average estimate of $11.73 compiled by LSEG. Its refining segment posts adjusted earnings of $6.06 billion, compared with $430 million a year earlier, while realized margin rises to $38 per barrel from $12.15.
Shares of Phillips 66 rise 1.3% in premarket trading following the results.
Sector benefits from tight global fuel supplies
Phillips 66's performance reflects broader gains across the U.S. refining sector as supply disruptions tighten global fuel markets. Peers Valero Energy and HF Sinclair also report record third-quarter profits, underscoring how refiners benefit from constrained supply and elevated product demand.Quarterly U.S. refinery margins, measured by the 3-2-1 crack spread, are up more than 150% on average in the July to September period from a year earlier. U.S. fuel exports, particularly diesel used in manufacturing and agriculture, also hit record levels, supporting refinery profitability.
In our earlier article on the spike in crude oil shipping costs, we explained how conflict-related risks are driving tanker and insurance rates sharply higher and adding a major new premium to the delivered price of oil. We also noted that these surging freight costs can filter through to fuel and consumer prices, while affecting market players unevenly—squeezing some importers and refiners even as tanker owners benefit from record day rates.
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