Global oil refiners enjoy short-term boost

May refining margins hit a 14-month high

- ROBERT HARVEY SHARIQ KHAN NICOLE JAO

Refiners across the globe are reaping unexpected profits from producing key fuels in recent weeks, offering an ailing sector respite before an anticipated weakening later this year, as plant closures have tightened fuel supply needed to meet peak summer demand.

The strength in fuel markets contrasts with crude oil prices falling to a four-year low in May, after Opec+ unwound output cuts faster than planned. It also suggests demand has so far proved resilient despite ongoing concerns about the impact of tariffs.

“Margins are strong because the balance of products — supply and demand — is still tight,” said Sparta Commodities analyst Neil Crosby.

Refining margins reflect the profits a plant makes from processing crude oil into fuels such as petrol or diesel.

Just a few months ago, oil majors were warning 2025 would be a bleak year for refining. TotalEnergies and BP reported lower first-quarter profits because of weaker earnings from fuels.

Refiners have broadly struggled with waning demand from economic slowdowns, an increasing uptake of electric vehicles, and competition from newer plants in Asia and Africa.

Global composite refining margins reached $8.37 per barrel in May 2025, according to consultancy Wood Mackenzie, their highest since March 2024, but still much lower than the $33.50 average in June 2022 during the post-pandemic demand recovery and in the wake of Russia’s invasion of Ukraine.