Supply disruptions from geopolitical tensions drive Phillips 66’s outlook for elevated refining margins into 2027.
Phillips 66 (PSX) projects refining margins will remain strong through 2027, citing prolonged supply disruptions from the Iran conflict. The company expects fuel markets, including gasoline and diesel, to face continued pressure from reduced output in the Middle East, Asia, and Russia.
Refining margins surged in Q2, boosting earnings and enabling a nearly 25% reduction in net debt. The company is ahead of its debt reduction schedule, reflecting improved financial health. Refineries are delaying maintenance to capitalize on higher profits, raising risks of unplanned outages in 2027-28.
The outlook reflects expectations of sustained tight supply conditions, supporting margins despite operational risks.