Publications: Notes at the Margin

Refiners in Control (May 22, 2023)


US refiners govern the global oil market. Four independent firms process more than eight million barrels per day. These companies have enjoyed unprecedented refining margins for more than a year, margins reflected in share prices that are up by more than one hundred percent from their late-2020 lows. The individuals running these companies are not suckers. They will not be played for fools by Russia’s Vladimir Putin, Saudi Arabia’s Prince Abdulaziz bin Salman, or the UAE’s Suhail Al Mazrouei. Instead, they will be the ones playing Putin and the two oil ministers for patsies unless the OPEC+ countries make large production cuts at the upcoming June meeting. The four major US independent oil refiners (Valero, Phillips 66, Marathon Petroleum, and PBF Energy) also know that President Biden has their back—that is, he will provide the crude they require if an emergency occurs. Thus, they can ignore threatening statements from OPEC as they run their inventories down to preserve margins and profits. Welcome to oil’s new world.


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