A Refining Windfall for Those Who Produce

Quarterly results from the US majors illustrate the mechanics. Exxon and Chevron beat profit forecasts, lifted by refining margins boosted by the conflicts in Iran and Ukraine. At Chevron, profit nearly tripled to $9.9 billion. A barrel holds around $115, with no solution to the supply crisis in sight.

Mexico follows a comparable logic, at a different scale. Pemex says it raised its crude processing from about 612,000 barrels per day in 2018 to more than 1.1 million. The share of fuels sold that comes from its own facilities rose from 24% to 87%. The company attributes this notably to the Olmeca refinery and to upgrades at Tula. These figures are self-reported, but the direction is clear: produce at home what you sell.

Europe Pays for Its Closures

The contrast with Europe is stark. In twenty years, it has closed about a quarter of its refineries and cut capacity by roughly 10%. It counted on the transition to reduce gasoline and diesel demand, and costs from the emissions trading system (ETS) and the industrial emissions directive weighed on margins. The result is greater dependence on imported refined products, at the worst possible moment.

European gas has topped €100 per megawatt-hour, its highest since 2022, and the energy shock has added more than €100 billion to the continent's import bills. That surcharge reflects the entire crisis, not just refining. But the chain is legible: less domestic capacity, more exposure to prices, and a margin that benefits others.

Brussels Changes Its Tone

The Commission has launched a first high-level dialogue with refiners. EU refineries still cover about 70% of the kerosene and 85% of the diesel consumed in Europe. The military dimension also weighs, as NATO must be able to deploy and supply 100,000 troops in ten days, which requires refined fuel available on site. Imported crude does not replace absent processing capacity. Brussels also plans a sector roadmap including biofuels and e-fuels.

Limits to Keep in Mind

The file does not quantify refining margins themselves, and the physical gas flows of October 23 and 24 are too partial snapshots to establish a trend. Climate rules serve legitimate objectives, and the industry remains fragile: merger talks between Galp and Moeve have failed.

What Can Reasonably Be Concluded

The current crisis shows that refining capacity pays off and protects in times of tension. It does not establish, however, that Europe will durably reverse its trajectory. The challenge will be to reconcile supply security and climate objectives without reopening the mistakes of the past.

This article was written with the assistance of artificial intelligence and verified by our editorial team.