Oil refiners worldwide are experiencing an unexpected boost in profits due to tighter fuel supplies and resilient demand, offering temporary relief to an industry grappling with long-term headwinds. Despite crude oil prices hitting a four-year low in May after OPEC+ accelerated output cuts, refining margins have surged as plant closures and unplanned outages constrain supply ahead of peak summer demand.
Global composite refining margins rose to $8.37 per barrel in May 2025, the highest since March 2024, though still far below the $33.50 peak in June 2022 post-pandemic. Analysts attribute the strength to shrinking inventories and slower capacity growth, with net refinery additions lagging demand. Closures in the U.S. and Europe—such as Petroineos’ Grangemouth, Shell’s Wesseling, and LyondellBasell’s Houston refineries—have tightened markets for diesel and gasoline.
Fuel stocks in OECD nations (U.S., EU, Singapore) fell by 50 million barrels from January to May, amplifying price support. However, the rally may be short-lived. Trade wars, rising electric vehicle adoption, and new refineries in Africa (Dangote) and Mexico (Olmeca) could soon pressure margins. The International Energy Agency forecasts global oil demand growth to slow to 650,000 bpd in late 2025 from 1 million bpd earlier this year.