As Trump tariffs cause demand concerns, refining stocks plummet to levels not seen in two years.
Investors were rattled by fears about a slowdown in oil and fuel consumption and a decline in refining margins after President Trump announced new tariffs.
According to LSEG data, the market capitalization of top refiners Marathon Petroleum and Valero Energy, as well as Phillips 66, has dropped by more than 20 billion dollars since Trump announced new tariffs Wednesday afternoon.
Alan Gelder is vice president for refining chemicals and oil markets, Wood Mackenzie.
The price of crude oil futures was at its lowest level in four years, and headed for the biggest weekly percentage loss in over two years. This is due to fears that a trade war would escalate as China increased tariffs on U.S. products.
Brent futures fell nearly 8%, to $64.59 per barrel at 10:39 am ET. ET (14.39 GMT), while U.S. West Texas Intermediate Crude Futures fell almost 9% to $60.04.
Gelder stated that the refining industry is already oversupplied, so the recovery of its margins is heavily dependent on demand growth.
According to S&P Global Commodity Insights, global gasoline demand will peak at 28 million barrels a day this year, mainly due to the rapid adoption of electric vehicles and improvements in vehicle efficiency. This is especially true for China, which is the largest oil importer. Diesel demand has likely started to decline after peaking at 29 million barrels a day in 2013.
Gelder stated that "we are now anticipating much lower demand growth for 2025 and 2026. Therefore, not only does the tariff stall the recovery of refining profits we had previously predicted in 2026 but it also drives refining profit margins down, possibly back to levels from 2021," he said.
On Friday morning, shares of Marathon Petroleum, the largest U.S. refining company by volume, fell around 8% to $118.33. This was the lowest price since July 2023.
Valero Energy fell around 9%, to $104.32, its lowest level since May 2023.
Phillips 66 shares fell around 9%, to $97.49. This is the lowest price since July 2023.
The energy index fell by around 6% last Friday.
Analysts said that the new tariffs will fuel a trade conflict which will impact the global economy, as well as the consumption of refined goods such as diesel and gasoline.
The implementation of these tariffs forced the market into a re-examination of demand.
(source: Reuters)
