Editor Rene Gonzalez editor@petroleumtechnology.com tel: +1 713 449 5817 Managing Editor Rachel Storry rachel.storry@emap.com Sub-Editor Lisa Harrison lisa.harrison@emap.com Graphics Peter Harper Business Development Director Paul Mason Paul.Mason@petroleumtechnology.com tel: +44 7841 699431 Managing Director Richard Watts richard.watts@emap.com Circulation Fran Havard circulation@petroleumtechnology.com EMAP, 10th Floor, Southern House, Wellesley Grove, Croydon CR0 1XG tel +44 208 253 8695 Register to receive your regular copy of PTQ ptq Vol 31 No 5 Q4 (Oct, Nov, Dec) 2026
Predicting profitability in 2027
T he petroleum refining business is doing well with high diesel margins and near-100% utilisation rates. US refiners are experiencing unprecedented profit margins, driven by high prices for gasoline and diesel amid supply dis - ruptions. Elsewhere, European refining capacity is unusually tight due to closures, low stocks, and reduced access to Russian output. Meanwhile, Brazil’s Petrobras, reported refinery utilisation reaching 101% for the quarter due to optimised pro - cessing and reliability initiatives. Record profits and high margins provide insights into the overall economic health of refining operations, reflecting demand and capacity. In the US, 3-2-1 crack spreads reflect higher throughput and lower operating costs. For example, Valero Energy’s Q2 refining margins of $6.34 billion nearly doubled from $3.28 billion year-over- year, driving a surge in the refining margin per barrel to $23.00. The ability to quickly export into supply-short markets significantly benefits US refinery profitability. Reduced crude runs at Chinese refineries are having a surprisingly large effect on global refined-product markets, and this is an important part of why the US Energy Information Administration is expecting strong refinery profitability in the US to the end of the year. Besides diesel, jet fuel is currently a key contributor to strong refinery profitability, particularly because the international jet-fuel market has become tight. Higher profits from regulatory-driven renewable fuels are contributing to refinery profitability in several refining regions. For example, Neste Oil’s renewable products sales margin reached $1,223/ton, and sales volumes exceeded 1.0 million tonnes in Q2 2026, with oil products total refining margin at $25.8/barrel. In comparison, 95-97% utilisation rates at US refineries can nonetheless indicate that the risk of unplanned outages could immediately lower output by more than 500,000 bpd. Sustainable aviation fuel (SAF) is becoming an increasingly important growth engine for the renewable fuels market, particularly for renewable diesel producers and refiners that can convert existing hydroprocessing assets to SAF production. The most important point is that SAF creates a higher-value outlet for renewable feedstocks that might otherwise go into renewable diesel. In fact, SAF creates a new premium market for renewable molecules. It is no secret that conflicts in the Middle East and Europe could further exacerbate world oil stockpiles, which are already at historic lows. These lows cause underly- ing structural exposure affecting industry planning further down the refining and petrochemical value chain, including olefins, ammonia, and fertilisers. Against this backdrop, oil-to-chemicals margins compression has been affected by external market pressure in certain refinery regions, while other markets con - tinue investing further downstream in the petrochemical value chain. For example, Pemex Director General Víctor Rodríguez Padilla announced earlier this year a $21.2 billion investment plan for 2026 as part of Mexico’s Infrastructure Plan 2026-2030. One of the most relevant drivers of profitability trends can be seen in Phillips 66’s Q2 2026 earnings report, where adjusted results were lifted by almost 300% year-on-year as refining margins roughly doubled. That profit surge funded further debt reduction, sizeable dividends, and buybacks. Phillips 66 projects $136.2 billion revenue and $7.3 billion earnings by 2029. Looking ahead to 2027, refinery profitability is projected to be less exceptional than 2026, but still potentially healthy. What supports refinery margins today could change in 2027. However, overall, diesel and jet fuel cracks, Chinese refinery utilisa - tion rates, and worldwide refinery capacity additions and closures all weigh into any profitability model. Rene Gonzalez
PTQ (Petroleum Technology Quarterly) (ISSN No: 1632-363X, USPS No: 014-781) is published quarterly plus annual Catalysis edition by EMAP and is distributed in the US by SP/Asendia, 17B South Middlesex Avenue, Monroe NJ 08831. Periodicals postage paid at New Brunswick, NJ. Postmaster: send address changes to PTQ (Petroleum Technology Quarterly), 17B South Middlesex Avenue, Monroe NJ 08831. Back numbers available from the Publisher at $30 per copy inc postage.
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PTQ Q4 2026
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